Administration - is this legal?

[Nick666]

Hi -

Wanted a bit of advice - I've had some interesting information regarding a company I'm dealing with, basically they've gone into administration, but the assets have been sold on to a company owned by the exact same directors. I'm curious to know whether this is legal as if so it doesn't seem like much of an incentive to keep your head above water if all you have to do is split in two and let one of the 'you's keep the life preserver while the other one sinks with the concrete shoes!

If it's suspicious, who on earth do you report it to? Is the administrator supposed to be completely impartial? Surely they'd know what was going on and who owned what? If it's not them, then who? It just sounds like an easy way of getting out of your debts while keeping the good bits.

Thanks!

 

[GRDCredit]

Legal - yes, afraid so.

Google 'prepack' - here is one for you http://www.companyrescue.co.uk/company-rescue/options/Pre-Packaged-Administration.aspx

 

[Nick666]

That's ok, was more curious than anything! Thanks for the info!

Sounds good though, how do I set up a company to buy my personal debts off me then sink it?

 

[Eagle]

The things that companies can get away with is utterly wrong.

 

[S-Marketing]

The things that companies can get away with is utterly wrong.

Threads like this make me think twice about ever giving a Ltd company an amount of credit that I couldn't afford to lose.

 

Threads like this make me think twice about ever giving a Ltd company an amount of credit that I couldn't afford to lose.

Hopefullly you would already think twice about that??

 

[S-Marketing]

Hopefullly you would already think twice about that??

Walked straight into that one didn't I.

I think you know the point i'm trying to make though

 

[MrMichael]

There are proposals for reform in the area which should hopefully serve to increase transparency and confidence in pre-packs. I think they can be a useful tool in terms of rescuing a company as a going concern and preserving employment, but there's no doubt they've been subject to abuse to the detriment of unsecured creditors at times.

The main problem is that even if the previous company's assets were liquidated and dispersed to creditors, the bulk would go to the secured creditor if present. Either way, the little guys are prejudiced.

From 1 January 2009, administrators have been under a duty to disclose a range of information to creditors, about the pre-pack. You should ask the administrator for this information if it hasn't been provided.