Understanding IVAs and how this can affect your ability to run a limited company

Can I operate a limited company if I have an Individual Voluntary Arrangement (IVA) due to personal debt problems?

A company director doesn’t need to resign or lose their position if they have an Individual Voluntary Agreement (IVA) to solve personal debt problems. Unlike bankruptcy, where a director has to relinquish their position.

IVAs: Definition and how will this affect your ability to run your limited company? 

This would be like this: I’ve faced personal debt problems and numerous creditors are pressuring me for repayments that I can’t manage right now. Many other expenses keep adding up, and the stress has become overwhelming. 

I’m seriously thinking about starting an IVA to slowly overcome this debt and all the issues it brings. I’m aware that when you declare bankruptcy, you can’t be a company director. However, can I still be a company director if I have an IVA?

I’m eager to address my personal debt problems, but I won’t even contemplate this option if it means losing my role as a company director. After all, I can’t settle my debts without a steady income. I’m keen to find out if this is a viable choice for me, and I await your response eagerly.

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Can I serve as a company director with an IVA?

One significant advantage of an Individual Voluntary Agreement (IVA) is that, unlike bankruptcy, a director doesn’t need to resign or forfeit their position to address personal debt problems. This allows the director to continue their role as usual while the IVA is active.

Certain companies opt to incorporate a clause in their employment terms indicating that entering into an IVA warrants immediate dismissal. Therefore, a director employed by such a company couldn’t proceed with an IVA without risking their position.

Moreover, if you serve as a salaried director or your income relies on the company’s dividend payouts, you’ll be required to present records of the company’s financial data. This is to demonstrate that the company can sustain your personal income throughout the IVA period.

Nevertheless, if circumstances prevent you from continuing as a company director, your IVA doesn’t prohibit you from becoming a director of another company. 

Unless the hiring entity refuses to employ you due to your IVA, which is unlikely given the commonality of personal debt and IVAs among individuals.

David Jackson MD
Senior Partner at Vanguard Insolvency Practitioners | Website

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.