Pre pack administration (or Phoenixing) is becoming more and more popular as a way of rescuing a failing company. The process involves setting up a new limited company which then buys the assets of the old business.

The assets, employees and even company names are transferred to the new company. This new company then starts to trade as normal free from debt, and the old business is then normally liquidated.

A pre pack administration has significant advantages over other company rescue solutions

So what are the advantages of a pre pack over other business debt rescue solutions?

Firstly, historic debt is left with the old business in pre pack. This means that the new pre pack business can start trading without having to pay back the historic debt of the old company. This is in marked contrast with a company voluntary arrangement. With a pre pack the new business does not have the burden of this debt and can therefore start to trade profitably.

Another advantage is low price propecia the option to find more suitable premises or renegotiate with the landlord. If the old business was struggling with lease property which was no longer required, or was on unfavourable lease terms, the new company has the opportunity to renegotiate to change these.

It is also of benefit that the pre pack process means that the company’s business assets and employees are keep together. If key assets or teams are broken up as is often the case in an administration process, a business is not able to continue successfully even if it no longer has Kamagra jelly to contend with its debt.

So what are the downsides to doing a Pre Pack Administration?

A lump sum of money will be required with which to buy the assets of the old business. As an absolute minimum you will need around GBP15,000. The actual amount will depend on an independent valuation of the assets including goodwill and work in progress.

In addition to the sum required to buy the old business assets, when considering their budgets, the new business owners and directors will also have to factor in working capital for the new business.

Some believe that pre pack can be used to reorganise staff getting rid of any not required. However this is absolutely not the case. European law (TUPE) requires all employees to be transferred to the new company when another company buys it, and under the same terms and conditions. If some employees are not required then the new company will have to make them redundant taking into account all of their employment rights or face claims for unfair dismissal.

In many instances, pre pack administration Tadalis SX is a very good way of saving a business as historic debt is written off and unfavourable lease agreements can be re-negotiated. However, to work successfully, a pre pack will normally require significant upfront investment and will need to take account of employment law. As such, expert advice must be sought before deciding to proceed with a pre pack solution.

Author Bio: If your business is in financial difficulty why not talk to us about possible solutions such as http://www.company-debt.co.uk/pre-pack-administration.html Derek Cooper is Managing Director of Cooper Matthews Ltd. Cooper Matthews specialise in Business Debt Advice. They have significant experience in working with small to medium sized businesses.

Category: Advice
Keywords: pre pack,pre pack administration,financial difficulty,insolvency,company debt,business debt advice