I’ll warn you know that this will be a long post. It’s something that I don’t recall ever seeing being posted about. I wanted to make the post just so that anyone reading it, may be in the same position I found myself in 1996, and may be able to take something from it. One of the problems I had was finding any advise about different options I had at the time.
So what is bankruptcy? Well very basically if you see your life as a blank piece of paper, your born at the bottom of the page and your dead when you reach the top. Bankruptcy is a line drawn on that piece of paper. All your assets and liabilities are left below the line. Nothing can cross it, in a way it’s a new start.
In the early 90’s I took the plunge and bought a truck. One of HE Paynes old motors, a 1983 Volvo F10. At the time I worked for Marshalls at Halifax and got some work for the truck and crane trailer. I was on a very good wage at the time driving a grab truck in the kerb yard at Hipperholme. Initially I intended to put a driver on it and see how it worked out for a year, but in the end both the guy who was going to drive it and I, plumped for a partnership. The truck worked all through spring and summer to the end of September. As normal at this time of year things went quiet and as we were last in we were the first to feel the pinch. We weren’t to fazed by this and soon secured plenty of other work to keep the truck going.
We bought a second truck for the season after simply because we had plenty of work and didn’t want to cut the ties with our new found customers or turn the work down from Marshalls, who were getting busy again. To be honest we were like tarts, we simply couldn’t say no. Before too long we had one of the motors running at night on an A one contract for Constar at Sherbern. Looking at the figures, as I did constantly we knew the amount we was spending on maintenance was the reason we weren’t making anything. A mixture of frozen airline and an inexperienced driver meant that our next bill was for a new clutch for the F10. In hindsight how was he to know that if only he had peed on the line feeding the tanks that would have been enough to thaw them.
The trucks were now running 24 hours a day seven days a week. The FH we had on hire was returning in excess of 9 mpg compared with the 7.5mpg the old trucks were returning. The mileages were so high that the saving on fuel was enough to make the payments on a new truck. This also gave us the advantage that the trucks would work just as they should. Lets face it your not going to get a right driver to deliver a 03:00 load to Edmonton on a Sunday morning. So that’s the way we went. We took delivery of a brand new Daf 95. Sure enough the calculations were working out. But the brass the new wagon was making was being eaten up by the old one so another new one was ordered. Hell we had our necks out. We looked into factoring our invoices. All this did was make planning our cash flow almost impossible. When one of our smaller customers paid up it meant that the proportion of our other debt would increase with our biggest customer so it left us worse off. (but factoring is another post entirely)
In June 1996 we were at crisis point. We had our necks stuck so far out. The business was making good money. We had a turnover of around £12,000 week, £2000 of that was clear profit after everything had been paid. But we also had big debt’s. The final straw came when we got a bill for the VAT. We had plenty to put against it and so it was only around £5000, but at the time there was no way we could pay the bill in full and have enough money left over for the working capitol we needed. I rang the VAT office to propose that we paid £2500 on the due date and £2500 28 days later. This started a series of events that we had no control over. The VAT office rang our bank manager to inform him that we couldn’t pay our VAT. He immediately withdrew our overdraft facility (£1250) which meant that we now needed to find £6250 before the end of the week. The faded light at the end of the tunnel had gone out.
On the 7th July 1996 we went to Halifax court to declare ourselves bankrupt. I had never been before a court in my life, and it’s a day I will never forget. I can say with a clear conscience that we intended to pay every single penny back to our creditors but things just didn’t work out that way.
Three years later when the official receiver had finished with every thing the figures came out as total liabilities £240’000 (ish) Total Assets £128’000 (ish), so in theory our creditors should have received somewhere in the region of £0.50 in the pound.
As it happened they received sod all. After the tax man, who is the preferential creditor took a £10k lump the other £118’000 was swallowed up in the costs for KPMG, the official receiver appointed by our trustee in bankruptcy. (Now there’s a scam that needs exposing)
I guess I’m really lucky really as my best mate and spouse has stuck with me through thick and thin. It’s been really tough at times managing the family finances without so much as a bank account but I reckon that now, 8 years later, life has returned to normal.
Do I regret setting up as an owner driver? To be honest not a bit, after all I could have been still earning good brass doing a job that would have been boring me to tears although with hindsight (ah a wonderful thing) I think I would have been a lot more financially secure.
Has bankruptcy any lasting effects? In the short term many, can’t open a bank account, no credit (but maybe that’s a good thing). Then there’s silly little things like I’ll never be allowed to stand as a member of parliament or practice in the financial sector, indeed I’m not even allowed to stand as a trustee for any charitable organisation. But in the long term (8 years) I think I’ve finally come through it. I must admit though that it miffs me no end to think that if I had been doing a bit of kiddy fiddling then in two years it would be written off my records and yet as it is they will bury me as a bankrupt.
If I had have known then what I know now then maybe I could have done things differently, maybe just maybe we could have ridden the storm out (although to this day I don’t know how) but did I really want to be working in excess of 100 hours a week? (and that was when diesel was £0.49p/ litre so how would I go on paying £0.82p/litre) That’s another thing that annoyed me, that dam vat man was not happy that I had just paid my £18’000 fuel bill ie £3000 diesel/ £15’000 tax. Mind you look on the bright side if I had still been buying the same amount of diesel then I would have been paying £30’500 a month for diesel ie £6000 for the fuel and £24’000 for the tax. Up yours Gordon.
I know that it was an honest bankruptcy, which is more than I will be able to say about my next one. KPMG will be able to swivel for their fees, just like my creditors had to do for theirs.