Buying Assets From an Administrator 10 FAQs
Here you can download our Buying Assets From An Administrator - 10 FAQs booklet. An example of the useful information you can find in the booklet is featured below.
1. What Is A Transfer Of A Going Concern
Whilst different areas of law may define a going concern in slightly different ways, a transfer as a going concern, or TOGC for short, is usually seen to be a transfer of a live business that is capable of operating and has all the parts necessary to keep it operational following the transfer, and that after the transfer it is kept operational in the same kind of business as prior to the transfer. It is not a transfer of a select number of assets only, unless those assets are capable of operating as a business on their own.
2. What Does It Mean If A Business Is Being Sold On Standard Insolvency Terms
When you are making enquiries of an administrator or liquidator about buying the assets of an insolvent business or buying the assets of business in administration you will often be told that the sale will be on “standard insolvency terms”. These are terms of business, or clauses within a sale agreement, which reflect the fact that the sale is taking place via an insolvency process and the administrator or liquidator appointed has little first-hand knowledge of the company or the assets being sold.
A standard insolvency sale will usually mean that the seller does not give any warranties in relation to the business or the assets and that it is for the purchaser or buyer to make their own enquiries or conduct their own due diligence to ensure that they are happy with the business and assets being sold.
A typically insolvency sale will usually transfer “such right title or interest” as the insolvent company may have so the buyer may have to take a risk that it may not get what it thinks it is paying for (if it turns out the asset in question doesn’t actually belong to the insolvent company).
Other standard “insolvency terms” include provisions making clear that the insolvency practitioner is not personally liable, or provisions asking the purchaser to take over responsibilities to make payments to suppliers with valid retention of title clauses.
3. Can I User The Same Company Name Again
When you are buying the assets of an insolvent business you will often find that much of the value and goodwill lies in the name of the insolvent company. In some circumstances, as long as you have bought the rights to the trading name, you will be entitled to use it however if you have previously been involved in the management of the insolvent company you should be aware that it is an offence under section 216 of the Insolvency Act 1986 for you to be a director or involved in any way in the management of any other company or business which is known by or trading under the same name or a similar name. There are exceptions to this restriction and further details can be found in the accompanying booklet “Can I Re-use an Insolvent Company’s Name – 10 FAQS”. Should you wish to know if any of the exceptions apply to you please do not hesitate to contact us for legal advice.
4. What Is TUPE?
TUPE refers to the Transfer of Undertakings (Protection of Employees) Regulations 2006 which is a piece of legislation that explains how employees are treated if there is a transfer or sale of the business that they are employed by. What TUPE aims to do is ensure that the rights of employees are protected, and their contracts of employment are transferred to the new buyer in situations where a business, or undertaking, is sold. There are however exceptions to this, in particular in certain insolvent situations and if you are looking to acquire the business of an insolvent company we would be happy to provide you with more details.
IN ORDER TO FIND OUT MORE ABOUT THIS SUBJECT AND THE ANSWERS TO THE QUESTIONS LISTED BELOW, DOWNLOAD OUR HANDY TIPS BOOKLET HERE.
ALTERNATIVELY, CONTACT THE TEAM ON 020 7841 0390
5. Do I Have To Take On All Staff When Buying An Insolvent Company?
6. Do I Have To Pay VAT On The Purchase?
7. What Is A Pre-Pack Sale?
8. What Is A Phoenix Company?
9. What Happens With The Trading Premises In An Insolvent Situation?
10. Can I Pay For The Assets Of An Insolvent Company In Instalments?
Should you require any further assistance at all with these matters, then please contact one of our corporate specialists on 020 7841 0390 and we will be happy to discuss this with you.