From July 2018 Companies in Voluntary Administration are more likely to be able to continue trading as normal, and therefore to be able to be sold as Going Concerns or Restructured under current ownership.
The Voluntary Administration Process is a very flexible and useful way to Restructure businesses. It has just become better !
The New Ipso Facto Laws state that Certain Contracts cannot be cancelled just because of the fact that a Company has entered Voluntary Administration. Consequently, if payments are being made on time, the Services etc provided in the Contract should continue. Examples are Leases of Premises and Formal Contracts to Supply Customers.
A Business that depends on a Premises Lease or a particular Agency may be able to continue during Voluntary Administration and to be sold to a new owner with these Contracts kept in place.
The changes are in addition to the general Moratorium that applies during Voluntary Administrations. The Moratorium prevents Creditors from issuing legal proceedings and from repossessing leased equipment.
Voluntary Administrations provide a Transparent process that can achieve formal quick Settlements with Creditors.
Buyers of Businesses will have more confidence to enter into Negotiations with the Administrator.
The existing Directors may also be able to reach Settlements directly with Creditors resulting in their continued ownership and management of the Business.
Extra Background :
There are exceptions and key matters to consider, which can be explained in the context of a particular Company.
The new Laws deal with clauses known as "Ipso Facto" which in simple terms can mean "by reason only of".