When you have to deal with the insolvency and winding up of your company in the UK, it is not an easy thing to have to go through and it is rife with stress and stressful situations. Creditors are constantly on your back looking for payment and you have the prospect of liquidation to worry about as well. At times like this, it is difficult to know what is the right thing to do for your business and what is the wrong thing to do. Thankfully, there are options open to you in the form of loans and financing options that may help to provide you with some cash flow so that you can make the paying off creditors a little easier.
Pre-pack administration is a kind of company administration in the UK that lets your business, sell all its assets in what is called a pre-packaged sale and this is probably your best option so that you can continue on with your business and avoid the dreaded compulsory liquidation. Pre-pack administration services are on hand to offer you many benefits that will allow your company to keep trading or to quickly raise those necessary funds so that you can start paying off your creditors.
You Can Keep Trading
One of the best advantages of choosing a pre-pack administration is that it allows your business to continue and keep trading. You will, however, have to trade in a different name than your previous company. Your previous company will no longer exist, unfortunately, but that doesn’t mean that you can’t sell those assets to a new company. The new company will be known as ‘newco’ and it allows you to keep on with continued trading with your current customers and business clients. The newco is able to take on the old contracts that were in effect, honour them and thus you get to hold on to your old customers. Continuity is the key here and you get this with a pre-pack administration.
Creditors Get Paid
Creditors usually get the bad end of the stick as they are usually the last to be paid, and it takes many months to pay them if they get paid anything at all. Generally, creditors only get a little bit of what they are owed and they might only get it in small monthly payments over a long period of time. Pre-pack administration allows the creditors to get paid fairly promptly because it allows your business to free up some cash to pay them. The pre-packed asset sale can take place the moment the company enters into administration so that there are no unnecessary delays. Selling assets should be relatively easy and so creditors can get paid and debts are settled. The main thing is that you get to avoid compulsory liquidation, which does effect negatively, your creditor-debtor relationship. When you decide to enact pre-pack administration, the good relationship between you and your creditors can usually be kept.
If you want your company to continue to run, but in the shape of a new company then pre-pack administration is the right choice for you. It helps you to deal with ongoing financial problems and is the right solution for you.