A pre-packaged – or pre-pack – administration process involves the sale of a company to either a connected or unconnected party. A pre-pack sale will be arranged before administrators are formally appointed, which can help to minimise any disruption to trade and provide a continuation of employment to employees.
A company can be sold to a third-party buyer, or alternatively, the existing directors can set up a new company – or ‘newco’ – and purchase its assets at a fair market value. Employees will be transferred over to the newco through a process known as TUPE. Only viable businesses will be able to be sold through a pre-pack process, and the newco must have adequate funding in place to complete on the deal.
Rules surrounding pre-pack administration are extremely complex, and this can end up being a costly process, however, in some instances, it is the best way for a viable company to continue trading.
When a company enters administration, it is granted a temporary moratorium. A moratorium can be seen as a legal ringfence which is placed around the company, preventing creditors from initiating litigation proceedings.
A company cannot remain in administration indefinitely, however, there is not one sole route out of administration.
A company going into administration does not necessarily mean that the business will cease to exist; in fact, rescuing the company as a going concern is often the main objective.
At UK Liquidators, our service is fully partner-led and your case will always be overseen by a fully licensed insolvency practitioner.
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If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.
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