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Pre pack sale

Pre packed sale of an insolvent company's assets present many substantial benefits that are not to be ignored if done diligently.

If you're considering a pre pack sale and administration you should definitely consult with us first for expert advice before you reach any agreement with anyone else.  We will advise exclusively in your very best interests.  And you can be sure the Administrator you're having consultations with is not acting in your best interests. 

Invariably once the Administration is in place and the pre pack sale has happened the Administrator will be in funds from the pre pack sale proceeds and after the deduction of their typically substantial fee there, will be very little funds, if any, remaining for your creditors.

However, the Administrator is obliged by law to file a report to the Secretary of State for Business Enterprise and Regulatory Reform (BERR) on your conduct as company Director and to disclose any wrong doing on your part.  The reason for your company's failure must also be reported by the Administrator.  This may lead to serious, adverse consequences should action be taken against you personally at a future date by either the Administrator, the Secretary of State, HM Revenue and Customs or another authority or other third party.

Our specialist consultancy service will advise and help you prepare for a pre pack sale.  This will significantly improve your position personally while maximising your interest and extending you as much protection necessary.  We will seek to limit your exposure to any adverse consequence that may later arise.  Our expertise will help you through issues that would present you with difficulties and give rise for future action against you personally.  We will also recommend one of our commercially minded insolvency practitioners to manage the administration process.

Be sure to speak with us first before committing your company and yourself.

 

The value of good advice!

In the matter of E D Games Limited [2009] EWHC 223 (Ch), a former Director of a company in liquidation applied to strike out a claim brought against him by the company's liquidators, under section 212 of the Insolvency Act 1986 (section 212).

The liquidators alleged that the Director, in breach of his fiduciary duties to the company, caused the company not to pay VAT in the months before it went into liquidation. The Director argued that any loss that resulted from any breach of duty on his part was a loss to the company's creditors (and, in particular, HM Revenue and Customs) and not a loss to the company itself. Section 212 only allowed the recovery of loss sustained by the insolvent company.

The High Court found that, by not paying VAT, the company carried on trade that it could not have undertaken otherwise. That trading increased the overall net deficit on the company's balance sheet. The increase in that net deficit could, in principle, represent a loss to the company and be (wholly or partly) recoverable from the Director under section 212.

This case is not limited to a claim by HM Revenue and Customs but could apply to any creditor. Proper advice from Moneymeans will help you avoid the many pitfalls that are associated with insolvency. In this case the Director became personally liable just because of lack of knowledge and forward planning.

Contact Moneymeans today!