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[Harry Pool]

Hi

I have been thinking about doing a pre pack for my company as although I think it has a bright future, it has a number of debts which are holding it back and I am struggling to pay. What kind of costs would I be looking at with a pre pack?

[Derek Cooper]

Hi there Harry and welcome

The main cost associated with a pre-pack is the amount your new company will have to pay to buy the assets of the old business. This would have to be based on an independant valuation of the company. Do you have any idea what the assets of your business might be worth?

[Harry Pool]

I have not had a valuer in to take a look but I guess you could put a value on everything of between £10-15,000.

[Steven Jackson]

Hello Harry

Obviously an independent valuer whould have to verify your company assets, but if as you say, they are worth £15,000 then a pre pack administration or liquidation should be possible if you can raise this sum. If you feel unable to do so, then it is also worth considering the company voluntary arrangement option (CVA). A CVA has very little up front cost and so offers some considerable advantages where funds are tight. If you have not already done so, I suggest you speak to a corportate insolvency expert about this option as well.

[Graham Wilson]

Hi Harry

As the other posters have said, a large portion of the up front cost of a pre pack will be the amount required to buy the assets of the old business. However, on top of this there may some other costs that you need to budget for.

If HM Revenue and Customs are a creditor of your old business, they may require you to pay a deposit before they will register your new company for VAT. This deposit could work out similar to the VAT that the old business would have paid within a 3-6 month period.

You may also need some working capital to be injected into the new business to run it before revenues start to flow through.