Buying Businesses & Assets from Insolvency
Legal advice on pre-pack administrations and distressed asset purchases, combining our insolvency and corporate teams on a compressed timetable.
Enquire NowJonathan Lea Network advises buyers acquiring businesses and assets from administrators, liquidators and receivers, including pre-pack administrations, distressed asset purchases and connected party transactions. We advise on what the office holder can actually sell, on retention of title and third party security, on TUPE and the employment position, on the assignment of leases and key contracts, and on the risk of a later challenge to the sale. Our insolvency and corporate teams work in parallel so that the transaction keeps pace with the business.
Different from buying a solvent company, and different in ways that matter
The seller is an office holder who will give you almost no warranties. The timetable is set by the speed at which the business is running out of money. The diligence you would normally do cannot be done in the time available.
The trade-off is price. The skill lies in knowing which risks you can price and which you cannot, and in getting the answers to a small number of questions that actually determine whether the deal works.
What we check
What is actually being sold. Office holders sell what the company owns and no more. Stock on retention of title terms, equipment on hire purchase or lease, and assets subject to a third party’s security may not be the company’s to sell at all.
The employment position. Whether employees transfer under TUPE, which liabilities come across, what the office holder is and is not able to say about them, and what the practical exposure looks like after completion.
Property, leases and contracts. Whether leases can be assigned or require landlord consent, whether key customer and supplier contracts survive, and which of them contain insolvency termination rights that have already been triggered.
Intellectual property, data and the trading name. Frequently the most valuable part of the deal and frequently the least well documented. Ownership needs to be established rather than assumed.
Funding and security. Where the money is coming from, what security the funder requires, and how that interacts with the office holder’s timetable.
Challenge risk. Whether anything about the transaction, particularly the price and the process, creates a risk of a later challenge to the sale.
Pre-pack administrations
A pre-pack completes at the moment of appointment, which is what makes it fast and what makes the preparation matter.
Where the buyer is connected to the company, additional requirements apply, including an independent written opinion on the transaction before completion, which the administrator must take into account. Getting that sequence right matters. Getting it wrong invites a challenge to the sale afterwards, at a point when the business is already trading under new ownership.
How these transactions are staffed
Work of this kind splits into two halves that have to move at the same time.
One half is the transaction: the asset purchase agreement, the employment position, the property and the funding. The other is the insolvency side: the office holder’s powers, the process being used, what can properly be sold and the risk of a later challenge.
We run both in parallel rather than in sequence, which is usually what makes a compressed timetable workable. Our corporate team also advises on the wider transaction where a distressed acquisition sits alongside a solvent one.
See Corporate Transactions and Asset Purchase Agreement.
How we can help
Tell us what is being sold, who the office holder is and what the deadline is. We will tell you within a day whether the timetable is achievable, what we need to see first and where the real risks sit.
FAQs: Buying Businesses & Assets from Insolvency
Very few, and usually none of substance. Office holders sell on the basis that they have limited knowledge of the business and no personal liability, which is why diligence effort has to be targeted at the points that determine whether the deal works. Usually yes, where TUPE applies. Which liabilities transfer, and how they are priced into the deal, is one of the first questions to resolve. Connected party purchases are permitted and are common, and they carry additional requirements including an independent written opinion on the transaction. They also attract more scrutiny afterwards, so the process needs to be right. It can, particularly where the price or the process is open to criticism, or where a connected party purchase did not follow the required steps. Getting the sequence right at the time is the protection.
Tell us the deadline first
Distressed acquisitions are won and lost on timetable. Send us the details and we will tell you the same day whether it can be done and what we need from you.
Contact Us
We provide most enquiries with an indicative scope of work and fee estimate, based on the information you share. We aim to respond within one working day.
In the same email, you will be invited to arrange a 20-minute complimentary, no-obligation video consultation, should the proposed scope of work and fee estimate be of interest. This initial discussion is designed to help us better understand your requirements, refine the scope of work and ensure our approach is fully aligned with your objectives.Following the call, we will email you a definitive, formal fee estimate for you to consider and approve.
Where you would prefer to receive initial advice and guidance from the outset, or where a short introductory call would not be the most appropriate starting point, we may instead recommend a 2.5-hour fixed-fee appointment, starting from £750 + VAT. This enables us to review the information you provide, discuss your situation with you and provide considered, tailored advice at an early stage.
To make an enquiry, please email us at wewillhelp@jonathanlea.net, complete our contact form, or call us on 01444 708640.
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However, please be aware that the free 20 minute call is at our discretion. If you are more looking for advice and guidance on an initial call, we may instead offer a one-hour fixed fee appointment instead.
Our fixed fee appointments are between £250 plus VAT to £350 plus VAT* depending on the complexity of the issues and seniority of solicitor taking the call