This is a relatively new procedure whereby an agreement is made "in principle" for the purchase of an insolvent Company's business or assets prior to it entering into formal Administration process. As the Company cannot be rescued as a going concern the procedure provides a greater return for the secured creditors or achieves a better result for the Company’s creditors than if it were to be wound up.
Valuations would be undertaken of all assets. The purchaser would be required to demonstrate proof of funds and all relative finance must either be in place, or agreed with lenders, and payment terms agreed.
An Administrator is usually appointed in this process by either:
- the Company or its Directors
- the holder of a floating charge;
On appointment of the Insolvency Practitioner the sale takes place, usually on day one of the Administration. The sale proceeds would be paid into the Administration and the most appropriate exit route would be selected by the Administrator to enable the distribution to Creditors.
The liabilities of the business remain with the initial Company. Consequently any new company (often referred to as a phoenix company) can commence business without the "millstone" of historic debt. In addition, a pre-pack Administration can help preserve the employment of the work force and ensure the survival and preserve the value of the business.
To talk to one of our specialist team members please call 0800 458 3320 and ask to speak to a member of our Advice Team who will be happy to discuss YOUR personal circumstances and help YOU decide which way is the best for YOUR Company.
We understand that you may require guidance and encouragement to help you through these difficult times.
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We
understand that you may require guidance and encouragement
to help you through these difficult times.
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