What To Expect With Pre-pack Administration Of A Business UK
PoliticMag Press Release : October 31, 2020
When it comes to the world of business, it’s a universal truth that not all businesses survive against the test of time. In the UK, around 17,000 cases of underlying company insolvencies were reported in 2019 — a 6.8% increase from the previous year. insolvency practitioners play a crucial role in helping people sell their failing business. And one of the methods through which this is commonly done is the so-called pre pack administration.
In a nutshell, this mechanism allows the negotiation for the sale of a business and its assets to transpire before that appointment of an administrator. The actual completion of the liquidation of the business happens typically immediately after the appointment.
The Advantages of Pre Pack Administration
One of the main advantages of this method is its minimal impact on the business operations. This is mainly because the process can be quickly completed — and the terms of the negotiations can be agreed upon and finalised early on (that is, even before the appointment of an administrator, as previously mentioned). This also reduces the risk of losing employees while the sale and the transition are taking place.
While internal operations are maintained, the image of the business to consumers will also be protected — the reputation will remain intact. And as for investors, the good news is that the assets of the business involved will be guaranteed to be preserved.
What to Expect
If you’re planning to liquidate your business through this process, here’s what you need to do and expect:
First, you have to set up a meeting with capable insolvency practitioners (IP) — in the presence of at least one member of the company’s board of directors — to discuss and assess your business’ situation. This is where you’ll exhaust your options first before resorting to pre pack administration.
Before any valuation transpires, the company directors must pass a resolution first noting that the business shall undergo this type liquidation process. It is in this step that an advisor like an insolvency practitioner will be formally named.
Using financial documentation prepared by the directors, the IP will then prepare an asset valuation. These professionals are also responsible for assessing the viability of your business, typically, for the next 12 months.
IPs are required to advertise the sale of the business — even if there is already a potential buyer. This is to avoid any compliance issues.
Once terms of agreements are finalised, the appointment of an administrator by the court will take place. As your company is now formally under administration, the administrator will take on the job of meeting with creditors to explain the situation of the business. The sale also takes effect once the administrator is named.
After the sale takes effect, the new owners will now have the authority to manage your business and utilise purchased assets.
A Name You Can Rely On
Bridge Newland is a trusted name in business recovery and insolvency. Home to the UK’s most competent pre pack administration specialists, they follow an efficient process and offer their services through a low-cost setup. Know more them at www.bridgenewland.co.uk/pre-pack-administration. They’re also free to call at 0800 612 619. You can also email them at [email protected]