Selling a business in debt

[Dobbollah]

I've been approached by a member of the forum who has open conversation about buying our business, for a token £1.

We are currently following the spongebob plan, so to me, I have no idea why anyone would want to take on a business in debt...if it seems too good to be true springs to mind....

The person has said....

For its history, as access to most financial facilities is conditioned by having at least Three years of existence ...

Any insights or thoughts would be most welcome.

 

[NickGrogan]

Anyone looking is going to see a change of shareholders and directors.

 

[Dobbollah]

To me the idea seems odd as I'd fail to see the benefit...but in theory, if it went ahead and was all done correctly.....

Anyone looking would see the change, but does it matter?

 

[japancool]

Perhaps they want to write the debt off against profits to reduce corporation tax.

 

[Gavin Bates]

Obviously we have no details to go on but I have seen things like this in the past and it was a con so I would be very careful and get everything.

 

[Dobbollah]

I'm very cautious...if it seems to good to be true, it normally is....

 

[Dobbollah]

Obviously we have no details to go on but I have seen things like this in the past and it was a con so I would be very careful and get everything.

If no money is changing hands, and the company is signed over....I don't see what I have to be conned out of?

 

[Clinton]

Perhaps they want to write the debt off against profits to reduce corporation tax.

Not possible. See my comments here on the Legal Restrictions To Using Past Losses.

If no money is changing hands, and the company is signed over....I don't see what I have to be conned out of?

Oh dear, oh dear, I'm not even going to get into this.

Obviously we have no details to go on but I have seen things like this in the past and it was a con so I would be very careful and get everything (in writing?).

I agree. Getting things in writing isn't sufficient protection in itself. There's so much that can go wrong!

 

[Ian J]

I've been approached by a member of the forum who has open conversation about buying our business, for a token £1.

I have no idea why anyone would want to take on a business in debt...if it seems too good to be true springs to mind....

I think that we know who you are talkIng about as their first act upon joining was to spam their services like mad.

Does it walk like a duck and quack like a duck?

 

[japancool]

Not possible. See my comments here on the Legal Restrictions To Using Past Losses.

Interesting. Does this also apply in the case if a marger? Some years ago, a telecoms company I worked for did exactly this (this was about 10 years ago).

 

[ChrisCallaghan]

I have to agree with @Gavin Bates. Naturally we don't know the full details, and there are genuine people who are interested in buying failing businesses and turning them around, with the aim of turning them into successful and profitable businesses. However, there has to be something in that business that is worth rescuing for it to be genuine.

However, @Dobbollah if memory serves you've sought advice previously on this forum? Without digging through previous threads I'm 99.9% sure that sticking with the SpongeBob method was likely the right route for your circumstances.

I would ask that you look at this with a sensible head - what does this buyer gain? What is in it for them by buying your company for a pound? Is this potential buyer able to provide references for who they are and what they can provide?

The last time I came across this scenario (which admittedly was about 7 years ago!) the purchaser used the established Ltd company he had purchased to fraudently take out credit and a lease on a premise. The company subsequently ended up in a compulsory liquidation, with the Official Reciever (aka a gov liquidator) asking the ex director and shareholder to explain their actions.

The above is a very extreme example of the risks involved, but I feel its a story worth sharing.

Lastly I would say I spotted a new member of UKBF posting on all the most recent Insolvency Threads offering to buy companies for £1. Shortly after they were posted, UKBF removed those posts.

The SpongeBob plan is a tried and tested method for business owners like yourself who don't have the funds to instruct an insolvency practitioner for a liquidation. Personally I'd say I'd say stick with it. If you are unsure contact a licensed insolvency practice for a bit of free advice. Most would be happy to give up some of their time to gve you some free advice if you're worried.

 

[japancool]

The name BHS springs to mind.

 

[Dobbollah]

Your right we are in the spongebob plan at present....

I just thought I'd ask as I can't see why anyone would want a failed business with nothing going for it....

 

[Clinton]

Interesting. Does this also apply in the case if a marger? Some years ago, a telecoms company I worked for did exactly this (this was about 10 years ago).

Even in the case of a merger, or reversing into a shell, the losses can't be used. They can only be used as described in that article I wrote.

 

[Chris Parkman]

I agree with Clinton, there was a firm trying to do this nationally a few years ago, and it was all very suspect. I would stay away and stick with the strike off method

 

[Ian J]

I've been approached by a member of the forum who has open conversation about buying our business, for a token £1.

I'm guessing that you were approached via PM which is highly unethical and not how open forums are supposed to work.

I am also guessing that if they approached you this way they have also approached others this way too. Hopefully the others have had the sense to tell him to naff off

 

[Mark T Jones]

I'm pretty sure I know who you mean.

They came on here spamming, out of curiosity I took a look around.

Website as clear as mud - all promises, no substance.

Company - no substance.

Owner- self-proclaimed entrepreneur- no substance.

Well done for having a clear head and not falling for promises. Depending on your mindset personally I'd string it along and ask loads of questions to find out what their game is.

But in reality walk away is the sensible option.

 

[WaveJumper]

I think they hit about every thread on here over a couple of days I would certainly take on board the advice from those above

 

[IanSuth]

I seem to remember a decade or so ago buying up companies going out of business was a precursor to a giant VAT carousel fraud involving mobile phones - what the buyer got for their £1 was your VAT number and prior good history with HMRC which gave them a time to make a fortune before the alarm bells went off

 

[japancool]

I guess it is very tempting if you've been struggling for a while, but it's best to be wary of promises of business debt free-.dom.

 

[BDF-Anon]

Open forum means it is open to anyone, isn't it?
We do approach owners of businesses in debt in order to find those businesses that are still carrying value, in a form or another. Your garbage might be someone else's treasure...

 

[Mr D]

Open forum means it is open to anyone, isn't it?
We do approach owners of businesses in debt in order to find those businesses that are still carrying value, in a form or another. Your garbage might be someone else's treasure...

Don't think anyone has a problem with taking a business that has value and turning it around.

Its the ones taking a business and using it for fraud / shady dealings.... and they also tend to be the better known examples.

You generally don't hear on forums about 'Hey I purchased this company for £1 and turned it around its now worth £50k'.
Occasionally hear of buying a company for £1 and not being able to save it.

 

[UKSBD]

I've been approached by a member of the forum who has open conversation about buying our business, for a token £1.

We are currently following the spongebob plan, so to me, I have no idea why anyone would want to take on a business in debt...if it seems too good to be true springs to mind....

Ask yourself.

How much is it going to cost you just to shut down?

How much will solicitors fees be to ensure if you sell it doesn't bite you on the bum later?

 

[ChrisCallaghan]

Your garbage might be someone else's treasure.

I mean no disrespect to @Dobbollah 's business, but having re-read her situation on the original thread she posted, I'd be intrigued if you could identify for us all what 'treasure' someone would be getting for a £1?

 

[BDF-Anon]

If we would start explaining the advantages of our approach, then everybody would try to do it. Not a good business strategy.
The only meaningful answer to the speculations made in this thread by some members of the forum:
once something is sold, the new owner is the responsible for whatever things might happen from that point onwards! The previous owner has no more responsibility, unless it transpires that they have committed anything illegal before the sale ...

 

[japancool]

The previous owner has no more responsibility, unless it transpires that they have committed anything illegal before the sale ...

Tell that to Sir Philip Green.

 

[ChrisCallaghan]

If we would start explaining the advantages of our approach, then everybody would try to do it. Not a good business strategy.
The only meaningful answer to the speculations made in this thread by some members of the forum:
once something is sold, the new owner is the responsible for whatever things might happen from that point onwards! The previous owner has no more responsibility, unless it transpires that they have committed anything illegal before the sale ...

I understand the advertised benefits for the director selling the business. My previous question was aimed more at asking what is in it for you? I'm assuming your not buying distressed businesses for a £1 out of the goodness of your heart?

 

[Mr D]

Tell that to Sir Philip Green.

Why? Did he buy the business from his wife?

 

[BDF-Anon]

Reading more closely some comments on this thread, we believe there is a misunderstanding:
we are not looking to buy an indebted business for ourselves and we are acting as agents for one of our clients. What that client is going to do with the business, it is not our concern - we get paid for our work and that also includes neither asking unnecessary questions, nor divulging information to unrelated parties.
Also, this business will not be dissolved/closed/wind-up, therefore, the analysis from the point of view of legal implications when insolvent is kind of waste of time, in our humble opinion ... The business will keep running for the next few years, though, under new ownership / management.
At this point, the original poster has a business and we have a buyer. It is a basic business matter, and the OP is asking opinions over this unusual approach: so, answers should be factual, because speculations are of no use to anyone potentially involved!

 

[japancool]

Well, companies with a trading history ARE valuable in their own way.

 

[Ian J]

we are not looking to buy an indebted business for ourselves and we are acting as agents for one of our clients. What that client is going to do with the business, it is not our concern

Wasn't that the defence used by the person asked to carry a suitcase from one country to another

 

[BDF-Anon]

Wasn't that the defence used by the person asked to carry a suitcase from one country to another

Are you just showing off, please?

 

[Ian J]

Are you just showing off, please?

You've done very well considering that your company was only formed a month ago

 

[The Byre]

What that client is going to do with the business, it is not our concern - we get paid for our work and that also includes neither asking unnecessary questions, nor divulging information to unrelated parties.

Could you please describe a scenario in which a company or person buys a non-viable and totally insolvent company that has had more than three years of trading history and by doing so, benefits from that purchase without indulging in criminal activity (such as running up debts, inc. VAT debt and slamming the company into liquidation)?

 

[Clinton]

Are you just showing off, please?

I think he's showing off, yes. But ...he's the person who used to hire mules to carry suitcases for him, usually from places like Columbia to countries like the UK. So he knows about these things.

Now he just breaks up consignments (he brokes them white parcels down into factors - see his signature).

Don't mess with him. Unless you like waking up next to decapitated horse heads.

 

[Ian J]

Could you please describe a scenario in which a company or person buys a non-viable and totally insolvent company that has had more than three years of trading history and by doing so, benefits from that purchase without indulging in criminal activity (such as running up debts, inc. VAT debt and slamming the company into liquidation)?

No he can't as he's just the middleman who does business like the three monkeys who see no evil, hear no evil and do no evil

 

[The Byre]

we are acting as agents for one of our clients.

 

[BDF-Anon]

So far, plenty of negative comments on this thread.
Anyone contributing with anything valuable, please? Speculations don't benefit to the original poster ...

 

[fisicx]

So far, plenty of negative comments on this thread.

Unfortunately many members here will have seen how you aggressively self promoted soon after you joined UKBF. This effectively sealed your reputation and it’s unlikely to engender any trust in your business.

 

[Ian J]

So far, plenty of negative comments on this thread.
Anyone contributing with anything valuable, please? Speculations don't benefit to the original poster ...

Valuable to you or to the OP as there have been plenty of things written of value to the OP along the lines of caveat emptor