Hewetts have for many years undertaken a broad spectrum of insolvency and restructuring related work on behalf of companies, individuals and insolvency practitioners. We act for directors of companies in relation to insolvency issues, company administration matters and restructuring, as well as for individuals in Personal Insolvency and bankruptcy issues. Do you need help with putting your company into liquidation or administration, or advice as to the general solvency of your company or business? Are you considering a Pre-Pack? As we recover from the economic challenges we have faced there are plenty of ways under the current legislation where we can help advise you on ensuring that your company is fit for the future. We are based in Reading and Windsor, but operate a national service.
For Initial Free Advice Call Geoff Kew on 0118 955 9604
Hewetts can assist directors with:
Hewetts also have considerable experience in acting for insolvency practitioners in:
Pre-pack Company and Wrongful trading claims are where we can really help Directors limit thier liabilites.
It might be possible to proceed with a company administration by way of pre-pack. Pre-Packs were introduced under the Enterprise Act to enable companies, in certain circumstances, to sell their assets to a new company often, owned by the same directors and shareholders, with the transaction taking place in a very short period of time. Whereas under the old law this was generally considered to be unlawful, since the Enterprise Act it is considered lawful if signed off by the administrator. We can help advise whether a pre-pack is relevant and appropriate for your particular company.
If a pre-pack is not best-suited for you, there are other forms of process that might be appropriate, such as voluntary administration, voluntary liquidation, compulsory liquidation or transfer of appropriate assets.
As a director you need to be aware that if your company goes into liquidation, or is wound up, then liquidators and administrators have the power to look back through past Company transactions, and to hold directors personally liable for the actions of that Company. In other words the directors incur a personal liability, and the consequence of wrongful trading is to enable the administrator or liquidator to recover directly from the directors’ funds to repay to the company. Once an administrator is appointed, even for the purposes of a pre-pack, he will be duty bound to consider whether the directors have engaged in wrongful trading.
Under the Insolvency Act wrongful trading has a definition that can be widely interpreted. If the directors have been running the company in circumstances where the company has been unable to pay its debts as they fall due, then a liability might arise. We have considerable experience in dealing with wrongful trading issues and would be able to advise on:
- the likelihood of an action arising in the circumstances;
- the best course of action to take; and
- how to mitigate your position.
In relation to an administration or liquidation, directors will also have to give consideration to personal liability for unpaid National Insurance. Whilst there may be some protection over outstanding PAYE corporation tax payments, there may very well be a personal liability for National Insurance.We will also be able to assist you on the appropriate form of agreement to give effect to the transfer of assets. This will be required by an administrator, or indeed a liquidator, following the sale of those assets.
Hewetts also act for individuals in arranging Voluntary Arrangements and Bankruptcy issues. We can help you appoint Supervisors for Debt Settlement Arrangements or Personal Insolvency Arrangements and help you liaise with them with regard their progress. Please see our 'Personal Insolvency' and ‘Bankruptcy’ pages for more information.
We offer free initial advice, regardless of whether or not you later wish to instruct us to act for you.
1. Which business are best-suited to Pre-Pack?
A pre-pack allows an administrator to quickly and confidently sell a failing business before it is permanently damaged. The types of business where permanent damage can rapidly occur are ones where the principal assets are employees of intellectual property. Employees at a business which has announced its failure and is being marketed openly for sale are unlikely to wait to be rescued. There is a high risk they will search for alternative employment, leaving the business with no assets. It is virtually impossible to trade-on a service business out of insolvency other than via a pre-pack administration.
For many businesses the value is in its brand. Intangible items such as brand and goodwill can be irreparably harmed by insolvency. Businesses with few realisable assets but a strong brand are also best suited for pre-pack. Retailers often fall into this category where most stores are leased and stock held under retention of title clauses.
2. What are the benefits of a pre-pack?
Saving jobs; a better return for secured creditor; the value of the business is retained; and survival of the business.
Rather than wait for the company’s banks or creditors to appoint an administrator or wind the company up, a pre-pack administration allow the current shareholders to take proactive steps to ensure the survival of the business, an option not open to them otherwise.
3. Can I use a similar company name?
s.216 of the Insolvency Act refers to the re-use of the same or similar former company names (or trading styles). It says that a Company Director who does re-use such names may be personally liable for the losses of the Phoenix Company and may be subject to fine or imprisonment. There are ways around this. The Insolvency Rules set out three ways through which you may exempt yourself from the restrictions of s.216. The most common route is to buy the assets of the insolvent company from their appointed Insolvency Practitioner and serve the appropriate notices on creditors of the insolvent company.