Pre-pack insolvency arrangements
We help businesses facing liquidation or voluntary administration. We evaluate whether a pre-pack insolvency arrangement is suitable and devise a strategy to rescue businesses from a liquidation firesale. We fight to protect our clients’ rights and maximise their financial returns.
Does your business face liquidation or voluntary administration? What is the alternative for an insolvent business?
Pre-pack insolvency arrangements are widely used in the UK, and are an alternative to entering voluntary administration. The future of the business is determined before the appointment of a voluntary administrator or liquidator – so it is not left to a meeting of creditors to decide.
There are two criteria for a pre-pack arrangement – the business must be insolvent and the directors must be willing to restructure the business so it can be rescued and given another chance at success.
Pre-pack Insolvency Arrangements – explained
Firm Principal Ben Sewell takes you through an explanation of pre-pack insolvency arrangements
A pre-pack arrangement is a legal response to insolvency for small- to medium-sized businesses. Under this arrangement, the business continues trading through an alternative structure. That makes it different from phoenix activity, which involves illegal asset stripping.
We use pre-pack arrangements to help our clients protect goodwill, save jobs and avoid a liquidation firesale. We take care of all expert reports, valuations, accounting reconciliations, company incorporation procedures and other requirements.
Do you want to learn more about pre-pack insolvency arrangements for small to medium sized enterprises? Read our whitepaper
Sewell & Kettle Lawyers have published the only whitepaper in Australia on pre-pack insolvency arrangements and how they can be utilised by insolvent small-to-medium sized enterprises.
A summary of the key elements of the white paper is below. The complete whitepaper can be downloaded here: Click here to download the white paper.
Our firm principal, Ben Sewell, is an insolvency law expert.
Ben’s comment on pre-pack insolvency arrangements: Pre-packs aren’t utilised very much in Australia because phoenix activity is so big. However, if company directors utilise phoenix advisers they are putting themselves at personal risk – probably unnecessarily.
When I first became an insolvency lawyer there were plenty of factories that were being liquidated and the liquidators sold off all the plant and equipment and collected receivables. Since that time there aren’t any more old factories that are closing down outside the city. The new wave of insolvencies involves services businesses that don’t actually own any tangible assets.
There is an opportunity for company directors with viable businesses to look at pre-packs to restart businesses and also legally deal with creditors. Why not look at it? It won’t cost you much and it could avoid a messy voluntary administration process with very little chance of success.
Breakdown of our pre-pack insolvency arrangement services
Our core services are the analysis, execution and ongoing support of a pre-pack insolvency arrangement:
| Core service: Analysis | Core service: Execution | Supporting services |
|---|---|---|
| Analysis of your financial position – ratio analysis | Engagement of bookkeepers to complete write-up of transactions | Ongoing advocacy with external administrators |
| Analysis of tangible assets | Engagement of financial accountant to plan cash flow | Advice regarding obtaining finance and the terms of finance |
| Review of critical company contracts | Creation of new corporate structure including trusts | Acting for proprietors in related litigation |
| Consideration of debt ledger | Engagment of external administrators | Liaising with tax agent |
| Analysis of ATO running balance and statutory liabilities | Preparing asset sale agreements | Advice regarding business strategy |
| Analysis of proprietor’s personal liability position | Preparation of necessary contractual documentation | Assistance with developing a turnaround board |
| Viability analysis of business and proprietor’s strategy | Creditor negotiation | Preparation of shareholder agreements and key person contract |
Our points of difference
- Vast experience in dealing with companies in financial distress
- Urgent focus on getting results in crisis situations
- Specialist knowledge of insolvency law and current practice
- Support services including contract preparation, debt recovery and court representation that may be necessary for a restructure to succeed
- Flexible pricing methodology