Nobody wants to go out of business in the UK and we should do all that we can to keep our business afloat. However, sometimes no matter how hard that you try, you do end up needing some kind of assistance to help you out of this very awkward situation. If company insolvency is a forgone conclusion, then the best way to enact a business recovery is to avail yourself of a pre-pack administration, as it offers you many benefits that are quite unique when it is your hope to turn all this around. Regulations are in place to make sure that everything that is done is definitely within the confines of the relevant UK law and what is happening is that your company is being sold to a new owner under a different name so that the business can continue on.
Continuity of Business
With a pre-pack administration, there are choices available and the directors of the company can decide if they wish to purchase the assets belonging to their old company or if the assets will be sold to another interested party. This way the company’s assets are sold on to someone who knows about this particular type of business and it offers continuity for the business but also for all the staff that work there. Everyone gets to keep their jobs, contracts with other business remain and if it is a big enterprise, then the surrounding community will benefit as well. Currently in the UK with Brexit looming, it is important to keep businesses afloat and allow them to keep trading even if it is under new ownership. Creditors also benefit from this pre-pack administration because the business now has cash flow, which will go towards paying outstanding bills that are due.
Firstly, the directors by putting the business into a pre-pack administration saves their reputation as this is the most favourable option and it can be explained as a restructuring of the business, which in turn gives people peace of mind. This is also a favourable option for the creditors as historically they may not get paid at all if the company goes into liquidation. This way there is a fair chance that they will get paid and business with them will continue. The old company will be released from their old contracts and the new business can decide which ones it wants to keep and which ones it doesn’t. The contracts can legally be ended and leases and equipment not needed by the new owners can be ended also. Pre-pack administration is a way to avoid the liquidation of the old company’s assets as the assets are being sold to the new company.
Business recovery service companies make all reasonable efforts to make sure that there is a very smooth transition during pre-pack administration and that all rules and regulations are stuck to during the process. If you feel that your company is heading towards unrecoverable debt, then maybe it is time that you look into pre-pack administration for the benefit of you and your employees.