Not Paying Your Debts- There Ought to be a Law!
This is a perfectly legitimate thing to do if done properly and it is commonly referred to as a ‘Pre-Pack’. This is because a deal is agreed before the business is placed into Administration or Liquidation. The business is sold to the new company and the debts are left behind as a liability of the old company. Usually an arrangement can be reached to keep the business in the same premises.
Whilst it may an unpopular move for some, you have to remember that if a business closes down people usually lose their jobs and their livelihoods. If the business is therefore kept going the jobs can be saved and this is the main reason why the courts will work to save a business.
If your business is struggling, the sooner you get advice the better. If you have to react to outside pressure, especially to pay bills, then you will invariably be unable to put together the best deal possible. If you realise that in the near future your business will be unable to pay its debts then you still have time to plan your strategy. You also need to be aware that if you pay certain debts in preference to others or sell assets for less than their value you may have to repay the money yourself and we can advise you on this.
To get it right you need to consult a solicitor who will also involve a Licenced Insolvency Practitioner. They will then set up the new company, transfer the business from the insolvent company and deal with all the creditors left behind. By seeking the advice of a professional you can start looking forward and concentrate on making a success of your new business.