The government has today announced that it will not be changing the legislation on pre-packs in administrations after all. Pre-packs, or pre-packaged business sales, have always been controversial. In essence, they involve placing a company into administration and the business being immediately sold, often to the current management.
A business may need insolvency advice or be considered insolvent if it doesn’t have sufficient assets to cover its debts, or it is unable to pay its debts as and when they are due. If you monitor your businesses actual performance against your budget and the cashflow forecast regularly, this will give you an early warning of potential problems. You can then take action to avoid insolvency.
John Hartson, the former Wales, Celtic, Arsenal and West Ham striker, has recently entered an Individual Voluntary Agreement, or IVA. An IVA is a means of dealing with debts and avoiding bankruptcy and is typically facilitated by an insolvency practitioner such as those at tri group.
Rather than send Christmas cards, each year tri group (formerly Burton Sweet Corporate Recovery) makes donations to charity. This year, all members of the team were asked to nominate the charities which we will support.
Residential landlords will no doubt welcome a recent decision from the Court of Appeal in the case of Christina Sharples v Places for People Homes Limited.
Ms Sharples held an assured tenancy under the Housing Act 1988. She fell behind with her rent, and the landlords commenced possession proceedings. Five days before the scheduled hearing of the possession proceedings, Ms Sharples filed a bankruptcy petition and was made bankrupt.
The Insolvency Service has published the official insolvency statistics for the third quarter of 2011. In terms of company failures, the figures show:
Compulsory liquidations: 1,203 (-6.6%)
Creditors’ voluntary liquidations: 3,039 (+3.1%)
Receiverships, administrations and CVAs: 1,253 (+1.7%)
tri group are dedicated to providing excellent service and advice when it comes to corporate recovery. With expert teams based across the UK we are able to offer advice and guidance when it comes to both business recovery and insolvency.
The concept of limited liability is, of course, almost always rather illusory for smaller companies in particular. Invariably a bank will require personal guarantees from the directors as well as a charge over the company’s own assets. Directors and others should remember that lenders ask for guarantees for a reason, and that if a guarantee is given it should be assumed that payment will have to be made.
The recession may have officially ended some time ago, but the UK’s economic recovery is stuttering at best, and some pundits are even speculating that a “double-dip” is not inconceivable. So professionals who are not called upon to advise clients in financial difficulties and facing the prospect of insolvency are likely to be few and far between. Consequently they will need to be alert to the pitfalls that their clients need to avoid if they are to steer clear of sanctions.