Advise on buying a liquidated company

[The Ad Man]

Hi All,

Desperately seeking advise from this business forum, before I plunge into talking to lawyers etc. I hope you can help.

The owners of the business I work for, are planning to liquidate the business next year, forcing a redundancy of both employees (myself full time and 1 x part time). They are wishing for the business to be taken over by myself, as am I. They apparently will tell the creditors of my intentions / interest in buying the business.

I understand the company will have no control over the sale of the business as this will be with the creditors. At this point I am unsure as to how a creditor works to sell the business.
This is a small business that has not made money in years and has an turnover of around £160,000 per annum.
Due to the size of the company and its condition, will they generally except this as the only interested party or go out and seek buyers?
The business also has income from subscriptions and advertisers that are paid upfront for a 12 month booking or sub. What happens with these?

Ideally I want to buy the company and continue in the same way enabling the continuation of the subscribers and advertisers bookings. I have been told that if it was a company sale, they would need to pay the new company the difference that has been received in kind for the months the company have taken money in for business they no longer own?
Does this apply in a liquidation?

Many thanks

 

[Chris Ashdown]

When you say "has not made money in years" what do you mean, no profit or break even or lost money
If they liquidate the company then the Insolvency practitioner will be in control and try and get as much money out of the company to pay themselves and the creditors, this could be by selling to you the company assents but not the debt

The liquidators will need probably a few thousand up front to take on the job

Might be far easier if the owners just paid off any debts and just gave you the company or sold it to you debt free

 

[Mr D]

Why would you want a company that has not made money in years?
Why then run it the same way?

No need for liquidation, they can sell the company to you now. Or sell it to someone else though finding someone who wants a company that has not made any money in years.... ?

 

[The Ad Man]

Thanks Chris,

The company I am looking to get, it one of 3 companies under the main business. this main business makes money, whilst the others never do.....make of that as you will... A large debt is owed to the main business which is causing problems with a possible buy out + I do not want to keep the part timer on board as I can run this as a husband and wife operation.
I was unsure how proactive Insolvency practitioner are, in seeking a purchaser for a business outside of an internal offer?
I am also unsure regarding the money the company has received in advanced of bookings / subscriptions?

 

[The Ad Man]

Why would you want a company that has not made money in years?
Why then run it the same way?

No need for liquidation, they can sell the company to you now. Or sell it to someone else though finding someone who wants a company that has not made any money in years.... ?

Thanks Mr D,
The company never makes money mainly due to large costs inflicted on this business from the main business. When removing these costs and getting better agreements in place to reduce costs, it will be a great little business.

 

[Mr D]

Thanks Mr D,
The company never makes money mainly due to large costs inflicted on this business from the main business. When removing these costs and getting better agreements in place to reduce costs, it will be a great little business.

If the costs are imposed is it possible to remove them?

 

[Mr D]

Thanks Chris,

The company I am looking to get, it one of 3 companies under the main business. this main business makes money, whilst the others never do.....make of that as you will... A large debt is owed to the main business which is causing problems with a possible buy out + I do not want to keep the part timer on board as I can run this as a husband and wife operation.
I was unsure how proactive Insolvency practitioner are, in seeking a purchaser for a business outside of an internal offer?
I am also unsure regarding the money the company has received in advanced of bookings / subscriptions?

Hmmm... Pre pack administration? Would that suit better?

 

[Chris Ashdown]

I doubt the IP would even consider looking for a new buyer

How big is the debt and is it all to the main company who own all three companies, if so could they not just right it off as they would get little back if IP was involved

 

[The Ad Man]

Hmmm... Pre pack administration? Would that suit better?

I have had a quick search on good:
"Pre-pack administration is an insolvency procedure in which a company arranges to sell all or some of its assets to a buyer before appointing an administrator to facilitate the sale. It differs from conventional administration in that the sale of assets is pre-negotiated before an administrator is appointed, whereas in a regular administration the administrator starts marketing the business after being appointed.

Pre-pack administration often involves selling the business and assets of the old company to its current directors, who then form a new company. The assets, work in progress, debtor book can all be paid for over a period of time."

Sounds perfect...Do you know if I have to Tupe the employee ?

 

[Lisa Thomas]

Yes TUPE is highly likely to apply so take real care as you will probably be liable for all contracts.