What is the Business Debt Arrangement Scheme (Business DAS)?January 22, 2018
Things don’t always go your way in business. Important contracts can fall through, market demand can plummet and creditors can demand surprise repayment at the very worst times.
Unforeseen changes can throw an otherwise healthy business into turmoil in the blink of an eye, leaving its owners struggling to cope with mounting debts.
The good news for businesses in Scotland is that there are a number of debt management tools designed to relieve pressures and help them recover.
The Business Debt Arrangement Scheme (Business DAS) is one of those tools and, for the rest of this article, I’m going to dig into how it works and discuss what benefits it can offer you and your business.
What is Business DAS?
First things first, exactly what is the Business Debt Arrangement Scheme? Business DAS is a statutory debt management tool designed by the Scottish Government and available to certain businesses in Scotland.
Okay, but what does that really mean?
Basically, Business DAS is a tool that gives debt-laden businesses breathing space and allows them to pay back their debts over an extended period of time. Additionally, it freezes all interest and charges on the debts and prevents creditors from taking legal action to recover their debts.
Like personal DAS applications, you must apply for Business DAS through a DAS-approved money adviser. However, for business applications, your adviser must also be a licensed insolvency practitioner.
How does Business DAS work?
Your DAS-approved money adviser and insolvency practitioner will look at your finances and design a debt repayment programme lasting anywhere up to five years. This programme is then presented to your creditors for approval.
Usually, it’s in your creditors best interests to accept the proposal as they eventually recover their money and their customer business survives. The likely alternative is that you go bust and they could receive substantially less or worse nothing at all.
If your creditors accept the proposal, all the interest, fees, penalties and other charges related to the debts are frozen. Your business is also protected from creditors taking any action against you to recover their debt.
During your Business DAS, you make one payment each month towards your DAS, which is then distributed on your behalf to your creditors.
What happens when a DAS is completed?
A Business DAS sets out a clear debt payment programme that states how much the business must pay and for how long.
Once the programme has successfully ended, your business will no longer owe any of its creditors and the frozen interest and charges are written off.
How much does a Business DAS cost?
The vast majority of insolvency practitioners — who, if they wish to offer Business DAS, must also be FCA authorised — will provide free initial advice for businesses. This advice should cover whether or not a Business DAS is an effective debt management tool for your unique circumstances.
If a Business DAS is an appropriate tool and you wish to continue, your insolvency practitioner will charge a fee for setting up your Business DAS and then for acting as your money adviser.
What these charges actually are is a matter for negotiation between you and your insolvency practitioner.
How to apply?
You must apply for Business DAS through an approved money adviser, who must also be a licenced insolvency practitioner.
To find an approved money adviser near you, please view the AiB’s interactive map.
In February 2017, 180 Advisory Solutions achieved FCA authorisation, meaning we able to offer advice on the Business Debt Arrangement Scheme. For more information on our Business DAS service, please click here or contact our team directly to discuss your individual circumstances.
Finally, note that a Business DAS is only a solution for partnerships.
If you operate your business as a sole trader then a personal DAS may be more of an appropriate solution to avoid insolvency, save your business and protect your assets.
To apply for a personal DAS you must use an approved money adviser, who either works through an approved state organisation (for example, a Citizens’ Advice Bureau) or an FCA authorised private sector organisation.
If insolvency is unavoidable, it can still be possible to continue your sole trader business through a protected trust deed or sequestration. In order to access any of these personal insolvency solutions, you need to consult a licenced insolvency practitioner.
Again, in order to access any of these corporate solutions, you need to consult a licenced insolvency practitioner like 180 Advisory Solutions.
Please contact our team for a free and confidential discussion of your circumstances in more detail and see how we can help.