Purchasing assets from previous company to new

[Abstract15]

Hi,

Apologies if this is in the wrong section so please let me know if so.

I currently have a 40% stake in a business that is likely to face administration soon.

I would like to raise some funds to purchase the physical assets either before or through administration and start my own company as the main shareholder.

Are there any legal reasons this can’t be done if the price paid is of fair value? I don’t want it to look like I’m leaving a company with debt to have ‘another go of it’. Whilst the industry stays the same, there will be many differences in the business model from the company previously.

Any help here would be greatly appreciated.

Thanks.

 

[Mark T Jones]

On the legality, to the best of my knowledge it's entirely legal if you can demonstrate its fair market value - one of our resident IPs like @Lisa Thomas or @Chris Callaghan can comment further.

With regard to 'raising funds' there are several potential avenues, but conventional asset finance can be tricky with regards to valuation and proof of title.

 

[Abstract15]

On the legality, to the best of my knowledge it's entirely legal if you can demonstrate its fair market value - one of our resident IPs like @Lisa Thomas or @Chris Callaghan can comment further.

With regard to 'raising funds' there are several potential avenues, but conventional asset finance can be tricky with regards to valuation and proof of title.

Thanks Mark.

In terms of raising finance, I’m pretty confident in exploring a few avenues so not particularly looking for advice on this - though much appreciated.

My main concern is the administrators potentially sensing foul play in being part of a company liquidised with debt and moving assets on to start a new one.

Thanks.

 

[WaveJumper]

Well as above it can be done pretty sure the IPs will have more detail on this.At the end of the day its basically a phoenix a new business being created after an insolvent company's assets are purchased, not always a good look for the reason you mention as people wishing to do business with the new company looking at the history may well have some pretty significant reservations.

The question to ask yourself maybe, why do you think your new business model is going to be any more successful than the last.

Another thought getting insurance cover may prove a lot more costly so worth checking that out

 

[japancool]

You say you're a 40% shareholder, but are you a director? As a director, you have an obligation to act in the best interests of the company. If you can demonstrate that, you're probably good. A shareholder doesn't have the same obligation.

Is the company already trading insolvently?

You definitely need to have the goods independently valued.

 

[Lisa Thomas]

On the legality, to the best of my knowledge it's entirely legal if you can demonstrate its fair market value - one of our resident IPs like @Lisa Thomas or @Chris Callaghan can comment further.

With regard to 'raising funds' there are several potential avenues, but conventional asset finance can be tricky with regards to valuation and proof of title.

Thanks Mark

OP yes it can be done -if you are going to buy the assets prior to Administration you will want to ensure there can be no challenge of a transaction at an undervalue so as Mark correctly stated, you'll need to prove the price was at fair market value (ideally based on a professional valuation).

I would also add that the Directors will need to ensure the sales proceeds are protected.

Ideally this would all be done with the proposed Administrator's hand holding to ensure everything is done in the correct way. Such a sale could also amount to a pre pack.

You'll want to take special legal advice - have you thought about potential TUPE problems with any employees if you are acquiring most or all of the business?

Alternatively you can wait for it to go pop, then put an offer in to the Administrators so that they handle the sale.

 

[ChrisCallaghan]

On the legality, to the best of my knowledge it's entirely legal if you can demonstrate its fair market value - one of our resident IPs like @Lisa Thomas or @Chris Callaghan can comment further.

With regard to 'raising funds' there are several potential avenues, but conventional asset finance can be tricky with regards to valuation and proof of title.

Hi @Mark T Jones , just seen this. Thanks for tagging me, but that's my old UKBF user - new job, new profile. New one is is similar, just no space - @ChrisCallaghan

Thanks Mark

OP yes it can be done -if you are going to buy the assets prior to Administration you will want to ensure there can be no challenge of a transaction at an undervalue so as Mark correctly stated, you'll need to prove the price was at fair market value (ideally based on a professional valuation).

I would also add that the Directors will need to ensure the sales proceeds are protected.

Ideally this would all be done with the proposed Administrator's hand holding to ensure everything is done in the correct way. Such a sale could also amount to a pre pack.

You'll want to take special legal advice - have you thought about potential TUPE problems with any employees if you are acquiring most or all of the business?

Alternatively you can wait for it to go pop, then put an offer in to the Administrators so that they handle the sale.

Completely agree with @Lisa Thomas - I won't add anything further to muddy the waters.

 

[Porky]

@Abstract15
IMO you won’t have any issues putting a bid forward to buy the assets as long as the administrators deem it fair value, where you could catch a cold is on TUPE because you would likely have a responsibility for new Coy to take all the existing staff on under the same terms.

Nothing to stop you making some redundant on acquisition but you would have the associated costs and notice periods/ process to consider.

If the company was allowed to effectively die and wasn’t trading for a few months then you might get away with a bid just for the assets only at that point but the way HMRC are it would not surprise me if they came after you (especially if you are director of both) for a contribution towards costs. So imo the “hassle” factor here, so to speak, is not the asset acquisition it’s any potential staffing liabilities and you need to check that out.

Good luck to you, hope it works out.