Supporting businesses facing insolvency

By Stuart Hopewell, Pre Pack Pool

With the combined effects of lockdowns, high-interest rates, a faltering economy and the impact of war in Ukraine, businesses of all sizes are struggling.

Published in Norfolk Director Magazine Summer | Autumn 2023
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Business Advice: Pre Pack Pool

Recent trends show insolvencies are 55% higher than before Covid, indicating that Directors are increasingly succumbing to pressures and closing their operations.

However, an insolvency process called a ‘connected party prepack administration’ can compromise an insolvent company’s debts and still leave the Directors in control of their business. Under this scheme, Directors ‘buy back’ their business for an agreed figure, negotiated with an Administrator. Terms can include deferred payments to spread the cost.

This is still an insolvency procedure, requiring the services of a licensed Insolvency Practitioner as the Administrator. However, provided the proposals are independently evaluated by a third party, such as Pre Pack Pool, liabilities can be written down and the business can continue, often without the burden of historical debt.

Since May 2021, all such schemes must be reviewed to ensure they are fair and reasonable. This provides suppliers with confidence in the future of the ongoing business, and it is where Pre Pack Pool can help.

If you are contemplating such a scheme, you can apply for an Evaluation Report from us, commenting on the payment being offered and the grounds for the transaction. This report will be provided to your appointed Administrator and lodged with your proposals at Companies House.

Supporting businesses facing insolvency 1

Stuart Hopewell FCICM is Director at Pre Pack Pool. A full list of what is required to enable us to complete a report can be found by visiting www.prepackpool.co.uk

E: info@prepackpool.co.uk

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