If your company is insolvent now but has the possibility of future profitability then an administration process could help to restructure the company and achieve business rescue.
There are three main reasons for a company to enter administration:
- to rescue the company from closure
- to get better results for the company’s creditors
- to turn some assets into cash in order to make a distribution to one or more creditors
A typical scenario for a company entering administration is for it to be sold, either via pre-pack administration or by an open sale.
A licensed insolvency practitioner has to oversee your administration.
What is a pre-pack administration?
A pre-pack administration is an insolvency process we use to rescue a company that’s insolvent at the time but has a sound core business. During the process that company enters into an agreement to sell its assets to a buyer. The buyer could be a competitor, third party or even the existing directors operating under a new company name.
We’ve got an article dedicated to explaining the pre-pack administration process in more detail. You can read it here