Whilst some businesses will weather the coronavirus crisis with manageable disruption, others may need more drastic measures to survive.
Clare Lang, corporate partner at mfg Solicitors, says that a “pre-pack”, whereby a company is put into administration and its business is immediately sold to a new buyer company under a pre-arranged deal, could be the answer if your company cannot pay its debts but you still believe in the business.
Unless specifically assumed by the buyer company, trade debts, tax liabilities and liabilities to funders will remain in the old company, as will certain employee debts.
Pre-packs are generally quick and smooth, minimising price erosion and resulting in a better return for creditors. Overall, it can minimise the loss of confidence of suppliers, customers and employees – often saving jobs too.
During these uncertain times Clare Lang and mfg’s Restructuring and Insolvency team are here to support. To discuss further, contact us on 01562 820181.