The 6 benefits of a pre-pack administration
If you’re at the point where you are considering handing your company over to the administrators, you may think that it will be unlikely you could emerge from the process unscathed and in a financial position to ever run a business again.
But actually, there is a way for you to keep the best bits of your business and get rid of the worst while appearing to trade right through without a hiccup. And that is pre-pack administration.
Pre-pack administration is a flexible tool that can help you keep your staff, maximize your company assets and restore your faith in your capability to run a business. In fact here are the 6 biggest benefits of Pre-pack administration:
You can purchase the strongest assets of your company
Sometime when the liabilities are stacking up it’s hard to sort the wheat from the chaff. But assets like your brand, your client list, your customer database, and your website among others, are all key foundation stones of a new business that’s free from debt, onerous office rental contracts and expensive photocopier plans that drag your cashflow into the ground.
You will get the assets at a discount
You won’t pay full market value for your assets – you will only pay a percentage or the fair market value. This is because some of your assets won’t be worth much to outside companies, so getting some money from you rather than no money at all is often considered the best route by the administrator.
It is a transparent process for the good of the creditors
As well as benefiting you, it also benefits your creditors. By turning company assets into cash by selling to you, the administrator is making more money available for distribution to the creditors.
The company brand is protected
If you have spent years building up a brand, it’s galling to watch it being destroyed by a lean trading period. Pre-pack administration is conducted without the creditors – who are informed after the fact – so to all intents and purposes your brand and your company can get back on its feet again in the form of a new company that appears to have seamlessly carried on trading.
You can keep your employees
You don’t have to lose good staff and start recruiting again. Company employees can be transferred under a pre-pack administration so your clients get to speak to the same people they always have and you get to keep the skills you’ve worked hard to build up over the years.
The goodwill of the company is preserved
Goodwill is one of those things that is usually hard to put a price on, but impossible to trade without. It could be market penetration, customer loyalty, intellectual property, or proprietary products, among many others, but goodwill will always play its part in the day-to-day running of a business. And it’s value when you need to raise money to invest in the business after the pre-pack administration will be paramount.
So, if you’re running a business and are having cash-flow problems that threaten its stability, don’t automatically think about the traditional route through administration. A pre-pack administration could get you back on track and trading again in the shortest possible space of time.
For more information, call one of our pre-pack administrator advisers as soon as possible on 0800 043 2027 for a confidential chat, but don’t delay. You could end up severely restricting the options available to you.
Pre Pack Administration
Dave Parker on Jan 08.
"Fantastic service. They really knew their stuff and advised on the best possible solution for us. We are now back on track"