Module 6 Flashcards
Three purposes of Administration
A - rescue Company as a going concern;
B - achieve a better result than if the Company was wound up;
C - realize property to pay one or more secured or preferential creditors
What are the Sale of Business Considerations? (VAMPIRES)
Valuation;
Advertise;
Mode of Sale;
Property Matters / Risk;
Insurance;
Realistic Chance of Sale
Environmental Risks
Sales Memo / Contract
Which two SIPS are relevant to selling a Business to a connected party?
SIP 13 - Sale of Assets back to Connected Parties
SIP 16 - Pre Packaged Administrations
Which two SIPS are relevant to selling a Business to a connected party?
SIP 13 - Sale of Assets back to Connected Parties
SIP 16 - Pre Packaged Administrations
Define Pre Pack Administration?
“The sale of the business or assets that has been agreed shortly before entering Administration but executed by the Administrator shortly after the Company enters Administration”
Timeline of Pre Packaged Administration
1 - Initial Meeting and Engagement;
2 - Agreeement to place Company into Administration;
3 - File NOI;
4 - Appointment and Sale;
5 - Notify Creditors of Appointment;
6 - Administrator sends proposal report (no later than 8 Weeks after appointment)
Positives of a Pre-Pack?
Preserves Goodwill;
Avoids risk of Trading;
Avoids costs of trading;
General Insolvency costs lower;
Employees retain jobs;
Continuity of Contracts;
Continuity of Licenses;
Best price in circumstances;
Negatives of a Pre-Pack
Allows Directors to write off Company debt and get their Company back;
Limited marketing so is it best price;
Ethical concerns;
Risk of Phoenix Company abuse;
What will change if sold back to Directors
How many days do you need to disclose a Pre-Pack sale to Creditors?
7 Days
What do you need to disclose in a SIP 16?
Consideration;
Valuations;
Options;
Trading;
Efforts to reach out to Creditors;
Requests to funders for working capital;
Buy back arrangements;
Relationship disclosures;
Identity of Purchaser;
Names of Directors/members/management involved;
Guarantees given;
Source of Admin Introduction;
Marketing activities;
Extent of pre-appointment involvement;
Date of transaction;
Sale part of wider transaction?
6 Requirements to Market the Business
Broadcast;
Justify Marketing Strategy;
Independence;
Connectivity;
Comply or Explain;
Publicise rather than Simply Publish
What is the Pre Pack Pool?
Independent Company who review and give an opinion on the deal. For connected pre-packs only, costs 800 pounds, response in 2 days. IP must advise Purchaser of right to consult the pool. Whether the pool was consulted must be included in the SIP 16 report. Purchaser can include a viability statement when consulting.
4 Things an Employee can Claim
Wages;
Holiday;
Redundancy;
Pay in lieu of notice
Amount claimable for arrears of pay?
8 Weeks
Amount claimable for holiday pay?
6 Weeks
