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Insolvency Practitioners

Company Director Stress 7

Pre-Pack Liquidation

"Preventing liquidation of an unbalanced market will leave you in tears" - Ben Bernanke

A Pre-pack liquidation, an insolvency process, which permanently closes down a previous limited company. The method also opens a newly formed limited company from its ashes. The newco will usually carry on a similar business model leaving behind the debt created by bad debt and cash flow issues. The new limited company will require a new name avoiding issues with The Insolvency Act 1986, sections 216 and 217

PRE-PACK-LIQUIDATION

Pre-pack liquidation is a newly-formed company ( a phoenix) which purchases the assets of an existing company, which then enters liquidation.

When is a pre-pack liquidation appropriate?

For the process to be considered. Your company remains insolvent. If the limited company can trade out of its financial position, then other insolvency processes need to be considered.

So, the company maintains a profitable model, though pressure from creditors endangers its survival, then a pre-pack liquidation should be considered.

Applies when:

Your company business model is strong, with a good order book but experiences cash flow problems. EG. Bad debt.

  • Past bad debts affecting cash flow.
  • Creditor pressure threatening bailiffs or other court action.

Your business may be profitable, though cash flow drags it down and making it potentially a prime candidate for a pre-pack liquidation. PRE-PACK-LIQUIDATION

CAN THE PREVIOUS COMPANY NAME BE USED?

In some situations, you can use the name or similar. Regulations control the use of previous names in insolvency. The criteria have to be adhered to failing which you may be subject to fines, the protection of limited liability and even a prison sentence. So when selecting the company name, ensure you take advice from a solicitor, ensuring you comply.

HOW HBG ADVISORY HELP

To commence a pre-pack liquidation, we need to meet with you over a virtual meeting (Ensuring safety and confidentiality). We will detail in plain English the process involved ensuring the best option for you. If happy with our recommendations, then we proceed to be appointed liquidators and advise the procedures required to close the old company while opening a brand new company. Allowing you to move forward with the old debts behind you.

For further help, contact HBG Advisory on 0800 612 5448 open 8 am to 8 pm seven days a week.

Association of Chartered Certified Accountants