A prepack other wise known as a phoenix is whereby a business goes into administration with the intention of the directors purchasing the assets ofthe business in a newly formed limited company. Not all finance companies will fund prepacks so it is important that all ones ducks are in line before a business pushes the button.
It is important to have the right factoring or invoice discounting company in place. As banks more often than not will not finance prepacks it may be advisable to replace the bank owned finance company with a friendlier and more accommodating finance company. This may only work when there are no other bank borrowings. If an overdraft is in place consideration must be taken into account if notice is given to quit a factring facility as undoubtedly the bank will call in the overdraft facility.
If there are no other facilities complicating proceedings the new factoring company will replace the inflexible factoring company. AS they wll be the main debentyre holder they can appoint the administrator of your choice, fund the new co and collect in full the debtors of the old co. Seamless!
Perhaps not. Any hire purchase and finance lease deals must be taken into condsideration. It may be possible to rewrite any hire purchase or finance lease deals into the new co however not all finance companies will novate the agreements into the new. XL Business Finance has experince of helping customers replace such finance agreemnts.
Tags: Factoring, invoice discounting
