Pre-Pack Administration
The most commonly used product within insolvency services is pre-packaged administration. The deal is reached pre-appointment with an insolvency practitioner of our recommendation. This allows a phoenix company to purchase the assets back pre-appointment in preference to other creditors (with the exception of debenture holders).
Benefits of a phoenix company
A phoenix company arises from the ashes of another. This accomplishes the recovery of a business that has a viable core but is unable to repay outstanding debts. It is a pragmatic arrangement that protects the interests of employment and private enterprise:
- Preserves jobs for Directors & employees;
- Achieves a write-off of debt arrears (not subject to debentures or personal guarantees);
- Releases the business from leases or contracts that may no longer be required;
- Avoids disruption to customers & other stakeholders.
Advantages of a pre-pack
Pre-pack administration provides a planned, swift & secure transition to a new phoenix company:
- The sale of the business assets & undertaking is agreed in advance;
- The Director’s personal credit history is protected;
- The business may apply to trade under a variation of the original name;
- Minimum disruption occurs and it is possible that some staff and customers may be unaware of the change;
- There is no creditor meeting for the liquidation of the old company, requirement for local advertising or filing in the local courts.
As of November 2009 we are conducting an increasing number of “pre-pack liquidations”. These increase viability of recovery for companies requiring work-force restructuring solutions but do require a creditors meeting.
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