Media Release: Insolvency practitioner welcomes debt legislation update


A LEADING insolvency practitioner believes that thousands of Scottish businesses could be saved from bankruptcy, thanks to a legislative update.

MLM Solutions – which has offices throughout Scotland – was responding to changes (as reported, for instance, here) in the Debt Arrangement Scheme (DAS), which, until recently, was for individuals struggling with debt.

The legislative update means it has now been extended to apply to businesses too.

An increase in consumer debt prompted the Scottish Government to establish DAS back in 2004. The scheme allows individuals to repay their debts through a Debt Payment Programme and avoid the strain of going through the court system.

This success of the consumer DAS led the Government to develop the ‘Business DAS‘, which has come into effect this week. This scheme allows debts, such as VAT and PAYE arrears, to be repaid while a business maintains the on-going credit facilities which are often essential for survival.

Once a scheme is approved, creditors have agreed to freeze interest and charges and cannot take further action to enforce payment of the debt as long as monthly payments are maintained. It also protects assets, including the family home.

Business DAS Money advisers must be qualified Insolvency Practitioners. All cases must be completed within five years and no payment breaks are allowed. Scottish insolvency practitioners, MLM Solutions, who have been adapting the consumer DAS to help small businesses for the last four years, welcomed the move.

Ian Brown, senior manager, said: “Businesses, like individuals, can suffer from too much debt and this is often exacerbated by the lack of access to finance. A number of factors, such as high borrowing, forecasting, bookkeeping, credit terms, variable costs and bad debts, can lead to significant cash flow challenges for small businesses.

“Once creditors are chasing for payment the small business owner has two options: try to save the business while attempting to settle outstanding accounts or allow the business to fail by implementing an exit strategy that minimises the financial consequences.

“The Business DAS allows small businesses to fulfil their obligations to creditors and continue to trade: a win-win scenario for the economy.

“The Scottish Government has recognised that the DAS model has been successful in tackling consumer debt and has a role to play in addressing business debt.

“As such, the new introduction of the Business DAS now provides a formally recognised debt support tool for a sector which is paramount to the economy and local community.

“Our adaptation of the Business DAS has already preserved around 450 jobs.”

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Contact: Tom Mcconigley
Phone: 07974426813
Email: tom@prforhigher.com
Website: http://www.mlmsolutions.co.uk