Company Pre pack or Liquidation
Company Pre pack or Liquidation which option is best for the company directors?
Pre-pack are not as common as they were a few years ago because the problems it created for the creditors and also the problems the creditors created for the insolvency practitioners who arranged the pre-packs.
In over 90% of the cases a straight forward Company Administration would address the issues of a pre-pack without having to upset the creditors. Depending on the size of the business even a straight forward liquidation could also provide a solution without the need for a pre-pack.
In my personal opinion pre-packs are over rated and far too expensive at the cost of the company directors who are being led down the altar for the slaughter for a big fat fee. You see the insolvency practitioner will try and maximize the value of the old business and he will tell you it is because of the creditors. In part he is telling the truth but not the whole truth.
The whole truth is he is thinking the bigger the value he can achieve the bigger his fee will be. Don’t take my word for it, just take a look at the company’s house records of any pre-pack and see how the money was divided up and who got the biggest pay off, the creditors or the greedy insolvency practitioner? I have seen the insolvency practitioner’s fees as high as 50% and even more at times.
I am sure they worked hard for it or rather rephrasing that you worked hard for your money and paid them off more much more than needed.
So what’s the solution you might be asking yourself?
If you go and seek the advice from three separate insolvency practitioners you will get three different opinions and three different set of figures regarding the pre-pack. The question you should be asking in whose interest are they acting. Are they giving me biased or unbiased advice? And who can I believe to guide me with my interest at hand. That is easy just find yourself an Insolvency Auditor who will run through the different options you have and the most cost effective option also for you.
All insolvency practitioners are officers of the courts and bound by law and by duty to look after the interest of all the creditors. On the other hand an insolvency auditors job is to look after the interests of the directors or the business owners, helping them to minimize their personal liabilities by providing the best solution to the directors and not the creditors.
How will you know that they are not giving you biased advice? Most insolvency auditors will charge you for the consultation of their time where’s the insolvency practitioner is willing to give you his advice FREE. FREE advice but at what cost and to who?
Find a local insolvency auditor and get the best unbiased advice that’s best for you and your company.