When a business faces insolvency, decisions must be made as to which insolvency route will be best for the company and its creditors. A company may go into administration, liquidation or a voluntary arrangement. The term bankruptcy generally refers to personal bankruptcy – when an individual rather than a business (a partnership or a limited company) becomes insolvent.
If your company is insolvent but part of the business is probably salvageable and could conceivably continue, the best route is likely to be administration, or pre-pack administration. A pre-pack administration refers to situations where there is already a purchaser in place to buy the viable part of the business and that all terms of the sale have been agreed before the administrator is appointed. The administrator controls the business during the insolvency and the process of paying creditors and selling the business is completed.
One of the benefits of administration … Read more