Value Pack
Is pre-pack liquidation a better option than critics would have us believe?
Is pre-pack liquidation a better option than critics would have us believe?
Pre Pack liquidation or Phoenixing has become the subject of much debate over the past 12 months. A pre pack liquidation is the process by which the assets of a failing company to be sold to a new business (often owned by the directors of the old company). The new business then begins to trade in place of the old without the burden of historic debts. The old company is generally closed (or liquidated) leaving unsecured creditors with little or no return.
Much criticism has been aimed at this area of company insolvency particularly by those representing unsecured creditors. They argue that the pre pack process is being used to leave creditors high and dry with no hope of recovering what they are owed.
It is also suggested that there is not enough transparency in the process of the sale of assets within a pre pack. During the process, assets are valued and sold without any opportunity for unsecured creditors to intervene. As such, the best price for assets may not be realised and creditors are again left carrying the can. In other words, pre packs are simply being used to avoid paying unsecured creditors.
It is my view that these arguments against the pre pack process are fundamentally flawed. The main reason for this is that it is not the pre pack that causes a company to fail. The only time that pre pack liquidation is considered is where a company is insolvent. In this situation by definition there is not enough money to go around. As such, the likelihood is that the business will be closed, any assets realised and ultimately many unsecured creditors will receive little or no payment.
It is fair to say that the primary idea behind the pre pack process is to ensure the survival of a viable business thus preserving jobs and future trading opportunities. This is not the only aim, the process was also designed with the increased protection of unsecured creditors in mind. A pre pack focuses on achieving the maximum sale value of a failing company’s assets which maximises the potential dividend distribution to creditors.
The fundamental question is:
Can the pre pack process really deliver a better outcome for creditors than might otherwise be the case in a simple liquidation or company administration?
The answer I believe is that pre packs are the best way of extracting value from distressed businesses.
So why do I believe this?
In a pre pack, the old business’ assets are generally valued as a going concern and therefore are seen as far more valuable than they would be in a traditional fire sale during a liquidation. For example in a “people business” where assets would evaporate in a formal insolvency, they remain together in a pre pack and can be sold as a valuable whole. The point is that pre packs enhance the value preservation of a failing company by minimising the period of business disruption. In almost every case, if the company was simply liquidated or put into administration, the value of the enterprise is damaged beyond repair, ultimately reducing the amount available for unsecured creditors.
It is important to highlight that insolvency practitioners are bound to extract the highest value for creditors from the pre pack process. Statement of Insolvency Practice 16 (SIP 16) outlines the insolvency practitioner’s duty to take steps to ensure that the pre pack sale of company assets can be justified and is the right action in the circumstances. A recent insolvency service report indicates that only 3% of cases the conduct of the IP did not meet this guidance.
It is my belief that far from disadvantaging unsecured creditors, pre packs maximise any value left in a business which is doomed to failure. The process generates maximum value in the old business assets. Often overlooked is the fact that even if the distribution to creditors is little or nothing, the pre pack process generates an ongoing business, preserving employment and a future trading partner. Ultimately, companies are worth more alive than dead.
About the Author
Derek Cooper is Managing Director of Cooper Matthews Limited and a member of the Turnaround Management Association UK.
Find out more about how Phoenixing or Pre-pack could be a solution for your troubled business http://coopermatthews.com/phoenixing.html
Cooper Matthews have significant experience in working with small to medium sized businesses providing practical advice to turn your business around.
|
|
NDS Lite compatible 20in1 Super VALUE ALL-IN-ONE BUNDLE BANK CHARGER pack $15.99 |
|
|
SAVVY TABBY TREASURE TROVE VALUE CAT TOY 12 PACK GREEN $6.99 |
|
|
NEW TRISQUARE TSX100-2VP EXRS EXTREME RADIO SERVICE 2-WAY RADIO VALUE PACK $71.47 |
|
|
Petaloo – Color Me Crazy 120pc Value Pack Flower Layers $12.50 |
|
|
Hurley Sticker Pack 11 per sheet Surf Skate Snowboard Best Sticker value on ebay $5.00 |
|
|
Littlest Pet Shop – Walkables – Value Double Pack $18.56 |
|
|
100Yards 3/8″ 20style satin / grosgrain ribbon Lot 100Y Value Pack $6.99 |
|
|
1967 Daisy bb gun ad ~ BIG BUY GIANT VALUE PACK $5.99 |
|
|
Spider-Man Skateboard Value Pack – Street Flyers $49.99 |
|
|
Roasted laver Seaweed Sushi Nori Gim Gimbap Laver Snack Value Pack sesami oil $1.56 |
|
|
**Avon*SLIP INTO…*EAU DE TOILETTE*PLUS GIFT PACK**VALUE $130** $35.13 |
|
|
20 Yards 3/8” Grosgrain Dots Ribbon Hair Clip Ribbons Value Pack Lot $3.99 |
|
|
20 Yards 3/8” Grosgrain Dots Ribbon Hair Clip Ribbons Value Pack Lot $3.21 |
|
|
*** Get rid of Psoriasis *** 5 Sets Value Pack *** $206.00 |
|
|
Set of 3 Magical Embellishments Pencils + 12 Pieces of Transfer Paper Value Pack $7.20 |
|
|
7″ Polisher Value Pack Kit with Tool Bag $240.99 |
|
|
Swarovski All Size Crystals+ 4 Fl oz Gem Tac Value Pack $18.80 |
|
|
Swarovski All Size Crystals+ 4 Fl oz Gem Tac Value Pack $20.37 |
|
|
Swarovski All Size Crystals+ 4 Fl oz Gem Tac Value Pack $20.37 |
|
|
Swarovski All Size Crystals+ 4 Fl oz Gem Tac Value Pack $20.37 |
|
|
Swarovski All Size Crystals+ 4 Fl oz Gem Tac Value Pack $21.94 |
|
|
Swarovski All Size Crystals+ 4 Fl oz Gem Tac Value Pack $20.37 |
|
|
ThermaCELL Mosquito Repellent Refill Value Pack $23.99 |
|
|
Army Men Value Pack 2 PC Game NEW SEALED LARGE BOX $79.99 |
|
|
NEW HP 95 Series Photo Value Pack Q7932AN $37.99 |
|
|
GENUINE CANON Ink Value Pack / (2) PG-40/ PG40 Black Cartridges, New In Box $36.99 |
|
|
South Bend Sporting Goods VP-5 160PC VALUE PACK SINKERS $7.02 |
|
|
2 coupons for a FREE pack of Poise pads (10-16ct) up to 3$ value Exp. 12/31/12 $2.00 |
|
|
1 coupon for a FREE pack of Poise pads (10-16ct) up to 3$ value Exp. 12/31/12 $1.50 |
|
|
Red 2011 Bowman Chrome Bryce HArper Refractor (value pack retail) $9.99 |
|
|
SMART SCOOP CAT SMART VALUE ACCESSORY PACK – Authorized Dealer Free Shipping $31.75 |
|
|
Three (3) Large 32.1 oz Value Pack Cans of Gerber Good Start Gentle Formula $46.00 |
|
|
Current Consult Surgery Valuepack – Hardcover $2.29 |
|
|
Jupiter Sweet Pepper, Value Pack L@@K!! FRESH SEEDS $3.50 |
|
|
GAMAKATSU OCTOPUS CIRCLE HOOK VALUE PACK sz 8 208406-25 $10.99 |
|
|
MyLabSchool with Pearson EText – Valuepack Access Card $40.08 |
|
|
Gamakatsu Octopus Hooks Value Pack qty 25 02307-25 sz 6 $8.99 |
|
|
Irregular Hunter X + Rockman Rockman (Value Pack) $82.88 |
|
|
Snapdragon O.P. mix, Value Pack 1000+ L@@K FRESH SEEDS $3.50 |
|
|
RockMan Dash + Rockman Dash 2 Value Pack $84.18 |
|
|
1993 Lego Race Value Pack, collectible, in original box $24.99 |
|
|
10 Pack Foam Paint Brushes and Paint Brush Value Set Package $0.99 |
|
|
MINT AAAA CALLAWAY TOUR IS 15 BALL BONUS PACK $60 VALUE *** FREE SHIPPING++++ $28.95 |
|
|
The Great Outdoors Value 4-Pack – 500-Piece $29.99 |
|
|
MINT AAAA CALLAWAY HX HOT PLUS 15 BALL BONUS PACK $35 VALUE MINT FLAWLESS $18.95 |
|
|
For HP 80 HP80 Value Pack C4847A Dye Color/Magenta Ink $54.26 |
|
|
PGI-35/CLI-36 – Value Pack Black/Color Ink $19.99 |
|
|
100-2″*.75″ solar cell poly crystalline solar panel DIY Kit value pack 14W $15.02 |
|
|
Simpsons Playing Cards – 3 pack value package $6.75 |
|
|
SAMSUNG CLP-P300B VALUE PACK BLACK TONER CLP-300/300N & CLX-3160FN $117.81 |
|
|
QUILL 7-33993QL: Executive Desktop Stapler Value Pack $21.49 |
|
|
SAMSUNG CLP-P300B VALUE PACK BLACK TONER CLP-300/300N & CLX-3160FN $117.81 |
|
|
GENUINE OEM BROTHER DR400 DRUM & TN460 TONER VALUE PACK $211.60 |
|
|
Powerful LED Solar Lighting Garden Path Safety Simple installation 10 value pack $52.98 |
|
|
Pops It Off Push Down Bottle Opener: 3-piece VALUE pack $16.99 |
|
|
VALUE PACK! NEW White 3D Rose Blossom Hard Case Cover for Apple iPhone 4 4S 4G $0.99 |
|
|
VALUE PACK! NEW Black 3D Rose Blossom Hard Case Cover for Apple iPhone 4 4S 4G $0.99 |
|
|
VALUE PACK! NEW Pink 3D Rose Blossom Hard Case Cover for Apple iPhone 4 4S 4G $0.99 |
|
|
VALUE PACK! NEW Red 3D Rose Blossom Hard Case Cover for Apple iPhone 4 4S 4G $0.99 |
|
|
Craftsman BRAND NEW WITH TAGS 13″ & 18″ Tool Bag Value Pack 37537 $17.99 |
|
|
2012 Topps Gypsy Queen Value Pack (3 packs + 3 framed parallels) $12.99 |
|
|
Hanes Boxer Briefs P4 Value Pack 2349B4B $19.75 |
|
|
Men’s Value Pack! 2 Vaseline Men Fast Absorbing, 1 Vaseline Extra Strength $24.99 |
|
|
MINT AAAA TITLEIST TOUR DISTANCE 15 BALL VALUE PACK FLAWLESS RETAIL VALUE $30 $14.95 |
|
|
MICROBE-LIFT PL 1 GALLON AND ALGAWAY 5.4 32 OUNCE VALUE PACK $65.88 |
|
|
Swingline Standard Stapler Value Pack, Includes Stapler, 5000 Count Staples and $10.99 |
|
|
Trident Value Pack Watermelon Twist 12- 18 Pc Packs $13.99 |
|
|
Basic Mathematics Through Applications Value Pack (… $314.78 |
|
|
Beginning Algebra Value Pack (Includes Math Study S… $289.24 |
|
|
MasteringGenetics with Pearson EText – Valuepack Ac… $22.75 |
|
|
PLANTRONICS 40707-01 VALUE PACK ENCORE H91/H91N/H101/H101N $25.33 |
|
|
Swarovski Elements Crystal AB Value Pack + Gem Tac Glue $20.37 |
|
|
Innotek Basic Contain and Train System Dog Fence With Remote Value Pack + 10 Ba $189.85 |
|
|
Cannon Ink Cartridge Dual Value Pack 40 Black $19.99 |
|
|
Dog Fence In Ground Stubborn Value Pack + 6 Batteries $194.95 |
|
|
• Mega Eyes Defining Marker 869 Blackest Black (Value Pack 2ct) $19.99 |
|
|
MATHXL ACCESS CODE AKST BRAGG BASIC MATHEMATICS THROUGH APPLICATIONS VALUE PACK $50.00 |
|
|
Basic In Ground Pet Fencing System Dog Electric Fence Value Pack + 6 Batteries $110.75 |
|
|
NEW Disney Pixar CARS 2 MEGA TRACK VALUE PACK 3 Track Sets & 4 Characters $32.76 |
|
|
2 VALUE PACK BAGS FACETED MULTICOLOR BEADS 485 PC OF 6MM 140 PCS 10MM FREE SHIP $8.49 |
|
|
Making Memories MINI BRAD VALUE PACK – Sherbert $4.99 |
|
|
HP 564 (CG491AN) Multi-Color Ink Cartridge Photo value pack. $23.99 |
|
|
# VE4M-TIE – PROFESSIONAL’S CHOICE ELITE TIE DYE BOOT VALUE PACK (MEDIUM) $120.25 |
|
|
Olay Definity Skin Care Starter Trio Pack ~ 1 Kit ~ Great Value $10.05 |
|
|
Fly Tying Tool Value Pack-Save $$$!!!! Free Shipping!!! $25.95 |
|
|
Keeper™ Bungee Cords Value Pack – 6 New & Assorted Bungees From 10″ – 30″ $5.00 |
|
|
Monster High Birthday Party Supplies – YOU PICK – 18 items to choose from $9.99 |
|
|
Nintendo DS Lite Hori Mario Brothers Mario Value Pack Stylus & Game Card Cases $20.99 |
|
|
Value-Pack 50 Round, Strong, Memo Magnets 1 1/4″ Assorted Colors $18.50 |
|
|
Genuine HP 75XL Photo Value Pack Q8846AN TriColor Ink New Sealed Made in Ireland $17.50 |
|
|
Keeper 06313 12 Bungee Cords Value Pack $6.40 |
|
|
FREE Any 12 Pack Coke Coca Cola NO Max Value No Expiration Coupon $4.25 |
|
|
Li Hing SourApple Candy~Hawaii~Value Pack~16oz $6.98 |
|
|
Li Hing Strawberry Sour Belts~Hawaii~Value Pack~16oz $6.98 |
|
|
Li Hing Gummy Bears Candy~Hawaii~Value Pack~16oz $6.98 |
|
|
Li Hing Sour Hula Keiki Candy~Hawaii~Value Pack~16oz $6.98 |
|
|
NEW PHILIPS 6 outlet power strip 2 outlet adapter 14 GAUGE CORD VALUE PACK $8.99 |
|
|
Positive Psychology- (Value Pack W/Mysearchlab) NEW $106.18 |
|
|
30X MAD CROC SUGARFREE ENERGY GUM:1 PACK = 3 ENERGY DRINKS =120$ value $19.99 |
|
|
Pure & Simple Gospel/Hyms Value Pack – 2 Book Packet for Advanced Piano $17.77 |
