A prepack is otherwise known as a phoenix. A business goes into administration and the directors purchase the assets off the administrator in a prearranged agreement. Not all finance companies will finance a prepack so it is important to get the best possible advice and have all the new finance facilities in place. A good corporate insolvency firm will provide experience and guidance as to the best way forward however when it comes to arranging the new finance facilities XL Business Finance can provide some help and experience of our own.
Depending on the factoring or invoice discounting company it may be advisable to replace the existing factoring company with a more flexible funder. As it is the factoring company that more often than not appoint the administrator it is important that the factoring company appoints the administrator which will assist with the prepack. A bank appointed administrator may lead to events not going the correct way. It is also important to take into consideration any other bank facilities which may be called in if a customer tries to change factoring companies. This will have an affect on personal guarantees. We have seen instances where procedure were carried out against the advice of the administrator, notice was given to the existing bank owned factoring company and the bank called in a substantial overdraft . As you can imagine things got a bit messy.
Tags: Factoring, invoice discounting
