Pre pack administration and pre pack liquidation essentially achieve the same results. A new company is formed and some or all of the assets of the old company are transferred to it. The mechanism that is used to achieve this result is usually administration or liquidation.
An administration would usually be used in preference of a liquidation if one or more of the following factors are relevant to the particular case.
Once we have been instructed we will assess the situation of a Company and decide upon the best course of action. Each case is different and it is vital that our advisers are able to adapt to any given situation therefore it is not possible to state the exact stages of the process that would be applicable to you. However, the usual stages we would follow when arranging a pre pack administration sale are as follows:-
1. Company Overview
An adviser will assess the current financial situation of the Company, clarify what the Directors wish to achieve from the pre pack process and specifically identify any time critical events.
2. Technical Expertise
You will be advised regarding any insolvency legislation that may be relevant regarding the transaction. For instance, transferring employees, re-use of a company name and SIP 16.
3. Instruct Valuer/Agent
A valuer that we know and trust (and that the eventual Insolvency Practitioner will accept) will be instructed to value the assets. This will indicate to the Directors the price that they will need to pay in order to transfer the assets from the Old Company to the New Company.
4. Arrange Funding
If required we will use our extensive network of lenders to put funding in place prior to the instruction of an Insolvency Practitioner. Alternatively, it may be possible to make payment on deferred consideration (e.g. payment over 10 months).
5. Sale Agreement
Informally liaise with an Insolvency Practitioner of our choice to put a sale agreement together. If the deal warrants it, we will recommend a solicitor to represent you during this process.
6. Instruct Insolvency Practitioner
An Insolvency Practitioner would be instructed to act as Administrator of the Company and to formally take steps to place the Company into Administration at court. If there is a debenture holder they will need to give the debenture holder seven days notice of the Administration, therefore it is vital that we choose an Insolvency Practitioner that the debenture holder will consent to.
7. Company Enters Administration
The Company enters Administration and the pre packaged sale completes (hence the name pre pack administration).
The process of pre-pack administration is not straightforward and there are potential pitfalls. We can hold your hand through this procedure. As can be seen above, we will already have the deal in place and agreed in principle before an Insolvency Practitioner is even instructed. Should you believe that pre-pack administration is an option that you would like to explore, take professional advice and give us a ring today. We will most likely save you time, save you money, and maximise the chances of the transaction succeeding without any hitches.