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 you try, you do end up needing some kind of assistance to help you out of this very awkward situation.
Each business is different, and depending on what the outcome is, there are always services on hand to help businesses who may have reached their end, or at least need to do some serious re-arranging. From a hotel strip out clearance contractor to mergers and acquisitions, businesses can work through these next steps.
If company insolvency is a forgone conclusion, and since UK banks generally don’t offer bridging facilities, restructuring and turnaround efforts are quite hard to put in motion. So then that leaves the option to avail yourself of a pre-pack administration for business recovery, as it offers you many benefits that are unique when you 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.
Continuity of Business
In a pre-pack administration, directors of a company have choices regarding the fate of the company’s assets. They can decide whether to purchase the assets themselves or sell them to another interested party. This decision is often made with the assistance of accountants in Ipswich, Scrutton Bland (or from a similar company), who can provide impartial advice about the best option for the company. This approach ensures that the company’s assets are sold for the best possible price. It also allows for a smooth transition, as the assets may be acquired by someone familiar with the specific type of business, providing continuity for both the business and its staff.
Everyone gets to keep their jobs, contracts with other businesses remain and if it is a big enterprise, then the surrounding community will also benefit. 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 save their reputation as this is the most favourable option and 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 its 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 liquidating 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.