Pre pack administration and debtors

[decworld]

Hi,

Can anyone tell me what happens to those companies which owe money to a company that goes into pre pack administration.

Do they owe the new company ?

Thanks
Dec

 

[dougie_bulldogbackup]

I think the administrator or liquidator of the old company will be owed any monies due.

 

[Scalloway]

As dougie says the administrator or liquidator of the old company should receive any money due to pay off the old company's creditors.

 

[Mylo]

The debtors would become an asset of the liquidated estate. Anything that could be gathered would be distributed to creditors, based on their status. In practice, debtors can be very difficult to realise.

 

[Lucas Johnson - IP's]

1. If the debts were factored then those customers must continue to pay the factoring company
2. If the debts weren't factored then the customers must pay the Administrator, unless
3. The debts were sold by the Administrator to a new company then the customers must pay the new owner of those debts.

If the customers don't pay then they may face legal action just as they would have done had the company not gone into Administration.

Are you a customer of a company that has gone through a Prepack scenario? If so then assume yor debt is due to the company or factoring company you first dealt with unless whoever is chasing you can provide evidence your debt has been assigned/sold on.

I hope this helps.

Kevin Lucas
Lucas Johnson Limited

 

[decworld]

I am owed money by the company I think is about to go into a pre pack administration.

The only way I can see that I could be paid is if all debts owed to the company are paid.

The whole pre pack thing seems very unfair if creditors loose their money and debtors still have to pay the new company.

 

[Scalloway]

I don't follow your last comment. All the comments seem to suggest that the debtors should pay the old company.

 

[decworld]

To clarify,

How is it fair the that a company restarts wiping off its liabilities, yet keeps the debts its owed.

Its like cake and eat it.

 

[Lucas Johnson - IP's]

The debts or proceeds from sale of the debts will go to the old company for distribution to creditors so the company itself and/or its directors/shareholders don't get the benefit.

As for you being owed by a company that might be about to go into a Prepack, what is the debt for - goods/services, supplied when, what are your t's and c's? There may be ways you can secure recompense for your debt if you act quickly.

As for Prepacks being unfair this is a debate that, whilst the arguments have been exhausted, will run and run and run until people find something else to talk about.

Kevin Lucas
Lucas Johnson Limited