The Pre-Pack Liquidation

While I've got a bit of time on my hands I thought I'd post up another few pages of advice that I've written about the company rescue regime in the UK. At these times many companies are struggling, often because their own customers are having a rough time. For many, it is the Limited company shell which is in trouble, as it may carry debt and not the actual underlying business itself. For these businesses the answer may be a prepack liquidation, whereby the business can be saved along with jobs but the debt can be hived off in the insolvent Limited company shell.

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Prepack liquidation

A pre-pack liquidation is a favoured way for a company that is in financial difficulties, to properly and correctly close the loss making entity, so as to protect the directors from accusations of wrongful trading, but to enable the business and the employees to be transferred to a debt free company.
It is the view of government that it is better to preserve the business and let the legal entity fail, than let a potentially profitable business founder.
We have the expertise to help you set up a new company and with the blessing of the proposed liquidator of the insolvent company, conduct a sale for value of the on-going trading element of the insolvent business to new co and then close the insolvent company at a creditors meeting.
There has been comment recently that there are too many pre-packs happening now. However, with increasing failures of companies, this is to be expected. A lot of businesses that are experiencing financial difficulties, are on an underlying basis, sound trading companies. If you take away their debt, they will flourish and continue to employ staff and generate sales. It is vitally important in today’s economic climate, to keep people with skills in employment, and to get companies trading with each other.
We can help pre-pack such businesses so that they can continue to build on the wealth of the country.
If you would like to pre-pack your insolvent company and re-trade in a debt free new co, please call us for an informal conversation, on how we can assist, and the likely timescales.