I am the director of a corporate hospitality agency that has become insolvent. I still have a lot of goodwill with my clients and am keen not to lose the book of contacts I have built up in this industry. Can you tell me whether there is anything to stop me from forming a new company from the remains of my failed business and opening up again under a different name?
There are legal restrictions on your plan to take the best bits/assets from your failed insolvent business and set up again under a different name. First take urgent advice from an insolvency practitioner. As a director you expose yourself to the risk of a wrongful trading action should the company ultimately be liquidated, and an adverse report on director's conduct, which could lead to you being disqualified. What you propose may be attacked by any office holder appointed over the insolvent company for being either a transaction at an undervalue or possibly a preference. You would have to make sure that you were paying a market value for the asset to avoid any liability and should take advice from an Insolvency Practitioner. The Insolvency Practitioner may advise that a pre-pack sale of the business is appropriate. A "pre-pack" is a sale of all or part of a company's business or assets that has been negotiated with a purchaser before the appointment of an administrator. The sale is then made by the company acting through its administrator shortly after the company is placed into administration. That process would allow you to purchase the parts of the business that you wish to retain and ensure that you pay a fair market price.
Published in the Financial Times on 11 August 2012