Business
Benefits of pre pack administration
This is the most preferred option in the insolvency sector. Its main aim is allow a phoenix company, i.e. the company that you wish to transform into to acquire the assets of the present company (‘old’) in preference to other bidders who have shown an interest in the company. This forms one of biggest advantages of a pre pack administration sale.
This type of sale is designed for recovery of businesses which is otherwise quite viable but which cannot afford to pay the outstanding debts, and which also may have long term cash flow problems. More benefits of pre pack administration, which are lacking in the case of business bankruptcy, include the following:
It enables a business to write off debt arrears though this does not cover debentures and personal guarantees.
There is continued flow of income from directors as well as the employees.
Shareholders are able to enjoy uninterrupted dividend flow. The same can also be said of directors in some cases.
There is no more need for leases and the business is able to be released from contracts.
Customers and suppliers enjoy normalcy in continuation of business.
The economy is not significantly disrupted especially if the employer is a big one.
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