Pre-pack Administration – transfers a business to a new entity without debts
Why do a pre-pack administration?
A pre-pack administration provides a seamless transfer from one business entity to another. It is the easiest way of preserving the value in a business and maintaining continuity with customers and staff.
Administration is one of a number of formal insolvency processes. The Pre-pack term refers to the fact that the sale of the business is ‘Pre-packaged’ prior to the formal process taking effect.
What are the benefits of Pre-pack Administration?
The benefits of a pre-pack administration can vary depending on your business’s situation, but you can expect the following:
- Clear your debts
- Continue in a new debt-free business
- Start a new business while keeping assets, customers and staff
How long does a pre-pack administration take?
We have completed a pre-pack administration inside 4 days, but this is the exception rather than the norm. Buying a business through a pre-pack administration tends to take a minimum of 2-3 weeks from consulting us until it happens, this timescale will be the same where you buy your own business back through this process. During this process your business can also be given protection from creditors from the moment you consult us up to the point the pre-pack administration takes place.
Can I buy the business back, how?
Yes, you can buy the business back. In fact in smaller companies this is what often happens – the director of the company going through the Pre-pack Administration buys the business back. The way it is bought back is by simply paying for the business and assets you want – you don’t have to buy them all, but it is often easier if you do.
Why do a pre-pack admin rather than liquidate my company?
There are many reasons to favour a pre-pack admin over a liquidation, winding-up or a CVA. It all comes down to your specific circumstances and what you are trying to achieve. One key difference is the time-scale of a pre-pack because it is often shorter and doesn’t involve a cessation in trade. Contact us to learn more about the reasons why you may want to use a Pre-pack Administration.
However, if you are running a business that is struggling financially, it can be an invaluable way out of your predicament and put you quickly on the road to recovery, which can also relieve an incredible amount of stress and reduce the risk of personal liability arising from wrongful trading.
I’ve heard some criticism of pre-packs, why?
A lot of people believe pre-pack admins are used by directors wishing to do an underhand confidential deal with the Administrator. Others dislike it because it allows a director to benefit from being able to seamlessly carry on a business whilst leaving all of the debts such HMRC tax or PAYE debts behind.
How do I do arrange a Pre-Pack Administration?
You need to contact a Licensed Insolvency Practitioner such as Lucas Johnson. We can provide insolvency advice and will tell you if a pre-pack administration is appropriate or if there are more effective solutions.
Contact us today on 0330 900 2000 to receive free confidential advice on your company’s circumstances and find out more about a Pre-pack Administration.
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