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- Buying/selling a business out of an insolvency process
Buying/selling a business out of an insolvency process
Business insolvency can lead to opportunity. It is not uncommon for an otherwise viable business to be facing financial pressure from its creditors as a result of cash flow difficulties caused by, for example, the insolvency of a major customer. In these circumstances, where the underlying business is a viable one, it is possible for the business to enter an administration process and look to sell on all of its assets to a new company. In this scenario both buyer and seller need expert advice on the proposed transaction.
There are pitfalls for the buyer in any such sale agreement and it must ensure certainty in terms of what is being acquired and on what terms. Other issues such as employee rights, transfer of contracts, assuming liabilities and warranties need to be considered. This is not an exhaustive list and each purchase must be considered on its own facts.
We have considerable experience in advising both buyers and sellers including directors and shareholders, liquidators and administrators in relation to such transactions.
