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Friday, 13 June 2014

Can I sell my company's assets before liquidation?

It may be tempting to 'move' or sell assets at a cheap price from your 'insolvent' company to another company (perhaps another one you own). However this could be breaching section 238 of The Insolvency Act 1986, known as Transactions Under Value.  

Insolvency Practitioners have the power to investigate company affairs that happened prior to the business entering administration or liquidation. If it's proven that assets were sold to another company at a knock down price, the director could be made personally liable for the company's debt, as it is considered as 'wrongful trading'. 

The administrator or liquidator can actually get an order from the Court to reverse the sale of the assets as well. 

Tread carefully if you wish to go ahead with selling assets and make sure you go about things the correct way. You must obtain professional valuations from a RICS surveyor and keep records of all sales and correspondence. You must also make sure the company's board approves your plans.

It's a complex process and can easily be misconstrued as wrongdoing so if you're unsure what to do, seek legal or insolvency advice. 

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Many thanks for your comments. If you have a private business problem and you want advice give us a call on 0800 9700 539 or email me at keiths@companyrescue.co.uk. If you are a professional advisor with a troubled client, please suggest they visit www.companyrescue.co.uk or contact me as above.

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