How to avert business bankruptcy with pre-pack liquidation
With the hard economic times, many businesses are facing a huge risk of being declared bankrupt. Most of these companies face a financial crisis due to a huge amount of legacy debt. This means that the current company income is used to settle debts incurred in previous trading periods. If your company is facing business bankruptcy from such a condition, it is possible to rescue it using a pre-pack sale. In this type of arrangement, a new company is setup by the directors of the older company once it enters administration. An agreement is made with the pre-pack administration to transfer the old company assets to the new one. Once the transaction is complete, the older company can wind up allowing the new company to operate. Pre-pack liquidation is one of the best ways to avert business bankruptcy if the financial crisis is caused by debts from the past. However, this method commonly referred to as phoenixing has continued to receive criticism from many people.
