‘Pre-pack’ administrations boosted by court decision

'Pre-pack' administrations boosted by court decision

Judge decides to allow a pre-packaged sale of a business entering adminsitration, despite major creditor HMRC's opposition to the plan

A High Court has blocked the taxman’s attempt to halt a sale of a business
through a pre-pack administration, in what could be seen as a landmark case for
the insolvency tool.

HMRC wanted to wind up DKLL Solicitors in an attempt to receive money owed
through a liquidation.

However, administrators from BDO Stoy Hayward argued that a liquidation would
see the taxman receive very little of the £1.7m owed to it.

The administrators had lined up a sale of the business prior to
administration worth £400,000 in a ‘pre-packaged’ deal.

HM Revenue & Customs argued that where the courts knew that, as the major
creditor, it opposed the pre-pack, the taxman should be allowed to block the
sale.

Andrew Simmonds QC, sitting as judge, said that the administrators’ plan
seemed the best way to safeguard the solicitors’ 50 jobs and would protect its
clients’ interests.

‘I am particularly influenced by the fact that the proposed sale is also
likely to result in the affairs of the partnership’s clients being dealt with,
with the minimum of disruption,’ said Simmonds.

Insolvency trade body R3 stated that the ruling showed that administrations
could be granted even when opposed by a major creditor, as the judge decided to
give weight to the fact that the pre-pack was formed impartially from insolvency
practitioners’ expertise and experience.

Further reading:

‘Quickie’ insolvencies help preserve
jobs

Share

Subscribe to get your daily business insights

Resources & Whitepapers

The importance of UX in accounts payable: Often overlooked, always essential
AP

The importance of UX in accounts payable: Often overlooked, always essentia...

2m Kloo

The importance of UX in accounts payable: Often ov...

Embracing user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read...

View article
The power of customisation in accounting systems
Accounting Software

The power of customisation in accounting systems

2m Kloo

The power of customisation in accounting systems

Organisations can enhance their financial operations' efficiency, accuracy, and responsiveness by adopting platforms that offer them self-service cust...

View article
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y Accountancy Age

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
8 Key metrics to measure to optimise accounts payable efficiency
AP

8 Key metrics to measure to optimise accounts payable efficiency

2m Kloo

8 Key metrics to measure to optimise accounts paya...

Discover how AP dashboards can transform your business by enhancing efficiency and accuracy in tracking key metrics, as revealed by the latest insight...

View article