Is your viable business under extreme pressure from creditors? Are you facing a mountain of debt that makes insolvency likely? If so, pre-pack administration may present the best way forward. It will allow you to continue doing business while also providing relief from creditors pressing for immediate repayment.
What is pre-pack administration? It’s a way for you to legally sell your business assets to a new company, which in turn allows you to continue normal operations after company administration.
Pre-pack administration is often the best option for those with a viable business who wish to continue operating but are under extraordinary debt pressure. Whereas liquidation would result in the end of the business, pre-pack administration allows for the establishment of a new business to which current assets can then be sold and staff transferred. The company is then able to continue – albeit under a new name – while the old business entity is left to deal with the debt problem. Because pre-pack administration allows for continuity of the business and the preservation of jobs, it is the preferred option for companies that still have a robust cash flow and are otherwise viable.
For viable businesses that have simply accrued too much debt, pre-pack administration offers an array of benefits for employees and company directors alike including:
The pre-pack administration arrangement won’t work for every company with extraordinary amounts of debt. However, if your company still has a viable cash flow and numerous assets a pre-pack administration sale can allow you to transition from one business entity to another without having to liquidate assets or eliminate jobs.
If a company still has a robust cash flow, an active client base, valuable assets and the potential for future growth, liquidation in order to satisfy creditors simply doesn’t make sense. This is why pre-pack administration arrangements are a popular option for directors of such businesses.
A pre-pack administration arrangement will be facilitated by an insolvency practitioner (IP). However, in order for the IP to institute this type of arrangement your company will need to meet the following requirements:
If your business is insolvent or facing insolvency the most important thing is that you act in good faith. That means keeping the best interest of your creditors and employees up front at all times. If you believe your company to be insolvent then you should waste no time enlisting the services of a licensed insolvency practitioner.
Keep in mind that companies that enter pre-pack administration arrangements are beholden to Transfer of Undertaking (or TUPE) regulations. TUPE regulations are designed to protect employees during the pre-pack administration asset sale and compliance is mandatory.
If your company is burdened with debt but otherwise viable, pre-pack administration may be the best way forward. You’ll be able to relieve debt pressure on normal business operations and retain current staffing levels.
At HJS Recovery we offer personalised assistance with this and a full range of other options for companies facing extraordinary pressure from creditors or actual insolvency. Contact us today to learn more about pre-pack administration, as well as other options that may be applicable to your situation.
We’ve helped hundreds of UK companies face down the threat of insolvency and liquidation by helping them arrange pre-pack administration. We can do the same for you. You are not alone.
Call us on 0800 0141 130 for FREE and get confidential advice on this and other options for your business. Together, we’ll sort things out.
We have a team of advisers who have helped hundreds of businesses around the UK that have faced financial pressures on every scale. You are not alone.