If your company is being threatened with a winding-up petition, but has yet to be issued with one, you may be able to save your business by acting quickly.
Pre-pack administration offers a lifeline to companies that are struggling, but it is vital that you don’t waste any time if you wish to take advantage of the benefits this insolvency option can bring.
Contact First4lawyers to find out whether a pre-pack administration would be appropriate for your business, and we will guide you through every step of the process, making sure all the legalities are taken care of.
What are pre-pack administrations?
Pre-pack administrations involve the sale of your company to a third party in order to stave off the threat of a winding-up petition.
The sale enables the business to be relieved of its debts and unwanted contracts, and some pre-pack administrations involve staff and management changes.
The process of a pre-pack administration sale involves firstly appointing insolvency practitioners to examine the circumstances of your business and prepare a report that is then shared with the board of directors. The report should explore all potential insolvency procedures available to the company, and give explanations as to why a pre-pack sale was selected over other insolvency routes.
Your company’s directors will be required to come to a decision over whether or not they wish to proceed with the pre-pack sale, and if they do then a buyer will need to be identified.
Corporate insolvency law requires that insolvency practitioners market the business to potential buyers. If there is no interest in buying the business, then it can be sold to a selected third party, to existing directors of the company, or to a newly formed company.
You may find the process will go much smoother with help from a specialist solicitor, such as those First4lawyers can provide access to.
What are the advantages of pre-pack administrations?
If your pre-pack administration sale is successful, then your business will be able to continue trading without interruption. The value of your assets will be preserved, and the quick nature of pre-pack sales helps to minimise losses.
Your insolvency practitioner will be able to select the most suitable buyer for your company, and your firm’s reputation won’t suffer from the kind of negative publicity that comes with other administration proceedings.
What are the disadvantages of pre-pack administrations?
There has been criticism of the process for enabling incompetent directors to continue trading, while unsecured creditors bear the brunt of their failings.
It is important that your insolvency practitioner guards against the perception of abuse, and ensures that your company is in full compliance with the requirements of corporate insolvency law.
The conduct of your company directors could be investigated by HMRC during or after your pre-pack sale, and this must be taken into account to ensure that no unexpected problems arise.
I believe my business may need to go into administration – what should I do?
A qualified insolvency specialist can help you to choose the type of administration that will best meet your needs.
Insolvency specialists from First4lawyers can oversee the pre-pack administration process on behalf of your business. Our team is adept at recognising when a pre-pack administration will be the most effective option, given a company’s circumstances.
You can contact First4lawyers to discuss your options and learn more about how we can help you through a pre-pack administration that seeks to rescue your business from the threat of insolvency and liquidation.