“Horses for Courses”

Administration uses what is known as a “pre-pak”. The Insolvency Practitioner is appointed by the Courts as Administrator, but he will execute a pre-agreed contract of sale to Newco, in line with an independent valuation and pre-negotiated terms of payment. He is responsible for negotiating terms of purchase more beneficial to creditors than available otherwise.Interco uses Administration where company affairs are complex or- e.g - involve bank loans secured on assets. Administration requires formal Court action and is more expensive option.

Our favoured alternative in more straightforward cases is Managed Transition . The assets and business goodwill of the oldco are simply sold to newco via a Creditors Voluntary Liquidation and using an independent Valuer. As with Administration, given safeguards, extended payment terms may be possible.

An advantage of Managed Transition is that the sale and transfer of business can actually be effected before the Liquidation, enabling seamless business continuance, despite the changed ownership. The terms of sale will require re-endorsement by the Liquidator to ensure “fair market value”. Hence our use of an independent Valuer.

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