How Do You Buy A Business Out Of Insolvency?
This article covers some of the main pitfalls specific to buying an insolvent business. There are many advantages to buying a business out of insolvency, although it may not seem like an obvious choice, and it is increasingly used by many companies as a preferred method of expansion.The advantages of this type of acquisition must be offset against a higher level of risk. However, the fast pace of insolvency deals often leads to bargain prices, and the option of buying assets rather than the whole company can be an attractive proposition. An insolvency practitioner (IP) will be appointed, either by the courts or by company creditor(s), to handle the sale of an insolvent business. As a potential buyer, you must: • Find out on what basis the insolvency practitioner has been appointed. Legal requirements and procedures vary depending on whether the business is in administration, administrative receivership or liquidation and you will need to research the differences between these states. O
