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In the UK administration and the use of phoenix companies are becoming an increasingly common route for struggling businesses to go down. The good news is that if a core business is viable then most factoring and invoice finance firms will happily deal with the new company.

After or during a company or business insolvency directors need get the core business up and running and require funds to facilitate this. A company will require funds to be able to finance the buying back of assets on a pre-pack administration. Funding can be arranged in the form of asset finance on the company’s plant, machinery and physical assets

Funding can be arranged by factoring or invoice discounting of a company’s book debts to raise immediate working capital.

What is a phoenix company?

Many companies in financial difficulties find it necessary or desirable to start again. This is commonly called a “phoenix”. To phoenix means to die and then come alive again. Sometimes liquidating a company is the only option worth looking at. In some circumstances it can be ideal for the company.

This will usually entail:

  • The formation of a new limited company
  • Negotiations with the bank
  • Negotiations with the HM Customs and Excise and Inland Revenue
  • Protection of assets.
  • The safeguarding of Personal Guarantees.
  • Legal protection at every step of the way in order divide the past from the present.

What is a pre-pack administration?

In the UK pre-pack administration order allows limited companies to be sold without creditor’s approval. The whole idea of pre pack administrations is to protect the limited company in question from any objection from the companies’ creditors to facilitate a turnaround or business rescue.

  • The owners of the existing business form a new company
  • Which then buys the assets of the old company from the appointed administrator
  • The old company is left to be wound up

There are several firms of factoring companies that specialise in assisting directors with pre-pack administrations. A factoring company will assist by taking over the company’s existing book debts and then setting up a similar facility for the purchasing company that acquires the assets/business through the pre-pack administration.

Factoring can therefore provide the continuity in debt collection and can allow an existing factoring company to be replaced which may assist the Pre-Pack process

If your company is in financial difficulties but the core business is which is fundamentally OK contact us for initial advice on what your options are for preserving that business or your stake in that business. Call 0800 597 4757 or apply online.