Can I buy back my company assets and start again?
If you’re considering buying back assets from your liquidated company with your own funds, it’s highly advisable to seek professional advice before you decide to do so.
In this article, we’ll look at some of the things you should be considering before committing to a purchase.
Who can buy a liquidated company’s assets?
Several purchasers may be interested in the assets, including a company’s competitor, any unrelated third parties or the directors of the company that’s being liquidated.
Establishing a fair market value
One of the liquidator’s primary obligations is to ensure the company’s creditors receive the maximum return. To achieve this, they’ll have the company’s assets professionally valued or if the sale of the company assets has happened pre-liquidation, the insolvency practitioner will want to see an independent valuation and sale agreement once they are appointed.
Ascertaining a fair market value before the sale of any assets is fundamental to the process and ensures that the creditors’ losses are minimised.
When the liquidator is appointed, they will take control of the company and ensure that a fair value is attached to each asset.
Once the liquidator has determined the fair market value of the assets, they’ll usually be sold at auction.
Buying back assets is closely controlled under UK law. So, for example, if the liquidator later discovers that company assets were repurchased at below a fair market value, they will regard it as an ‘antecedent transaction’ and can reverse it. This is why it is so important that if you are considering a pre-pack liquidation that you take the right advice as soon as you can.
What’s the procedure if I want to buy back my company assets?
Should you wish to buy back some of your failed company’s assets with personal funds, the timing of the purchase is crucial.
Should you purchase any assets before the liquidator has been appointed, you will need to prove that you have purchased the assets for a fair value. You will need to have had the assets valued by an independent valuer and paid a fair price for them. If you don’t use the correct procedure or have an independent valuation carried out, it may well be viewed as a transaction that worsened the position of the creditors.
If such a transaction has been made beforehand, the liquidator will identify it during their investigation into the company’s failure. If the insolvency practitioner believes the correct procedure has not been followed, the transaction will be reversed, with your actions potentially resulting in allegations of misconduct.
The key point here is that if you are thinking of buying any assets of your deteriorating company before you appoint a liquidator then you need to follow the correct procedure and we suggest that you ask for some guidance around this.
Before you make any decision on whether to proceed with a pre-pack liquidation, there is a lot of things that need to be considered:
There are a number of benefits and drawbacks to a pre-pack liquidation
- Your business survives albeit in a new company structure
- The creditors of the insolvent company will receive a better return once the company assets are paid for
- Your new company starts debt free
- People’s jobs can be saved as you can transfer them to the new company
- The directors will have their conduct investigated by an insolvency practitioner. We advise that before you make any decisions on whether a pre pack liquidation is right for you, that you work with the insolvency practitioner to see what issues could arise if you continue with a pre pack.
- Your new company may find it difficult to get credit from suppliers. You will find it especially hard if you have left the same supplier with an unpaid bill from the company you liquidate.
- In most cases, you won’t be able to use the old company name or branding.
Need more advice?
It’s highly advisable to seek professional insolvency advice if you want to buy back any of your company’s assets with your own funds.
If you’re unsure how you stand as a director in this situation, get in touch with our expert team for some free impartial advice.