Table Of ContentBuying and Selling Insolvent Companies
and Businesses
Third edition
Buying and Selling Insolvent
Companies and Businesses
Third edition
Ken Titchen
Solicitor, Gateley Legal, www.gateleyplc.com
Susan Singleton
Solicitor, Singletons, www.singlelaw.com
With thanks to Keith Arrowsmith
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Dedication
To my family and friends who have supported me over the years, I thank you.
To my mother, whose tales of life in a solicitors’ practice led me to become a
lawyer, particular thanks for showing me the way to a long and fulfilling career.
Ken Titchen
To my solicitor daughters Rachel and Rebecca, my twin sons Sam and Joe who
completed the Legal Practice Course in 2022 and qualify as solicitors in 2024 –
may you have as much fun in law as I do, and to my oldest son Ben.
To my grandchildren Rose and Frederick and their new cousin Tabitha Mary –
you have it all before you.
Susan Singleton
v
Foreword to second edition
Three years have passed since the first edition of this book was released …
three summers, with the length of three long winters. It has been bleak weather
and bleaker economic times. In fact it has been so bleak that even Insolvency
Practitioners have been feeling the pinch. Charles Dickens would have loved
this era and would have found ample material for a few cold hard novels, with
happy endings of course.
When I penned the foreword to the first edition I thought then that the immediate
future would bring many administrations of distressed companies and many
businesses for sale. In fact, since then Western Europe has seen a period of
economic stagnation, high unemployment, low demand and low interest rates.
Inhabiting this parched corporate landscape are the charmingly named Zombie
Companies, Golem like entities with an existence but little life.
And yet in this grey economic climate Ken’s and Susan’s Buying and Selling
Insolvent Companies and Businesses has flown off the shelves. Funding for
business purchases and for investment has not been easy and so the skills
involved in maximising value when buying and selling insolvent businesses
have become more important than ever. It is these very skills that this book has
helped to hone for the current generation of restructuring professionals.
The politics of Austerity and of trying to balance the nation’s books have
translated themselves into new legislation and this book has been updated in
order to reflect the changing corporate environment and the new hurdles which
need to be cleared when dealing with already distressed businesses. And, of
course, it is not all bad news as there are the new provisions to make UK
PLC stronger and more adaptable to change. This mercantile adaptability has
been the mainstay of the UK, and in particular the City of London, since the
Middle Ages.
And so the chapter on Employment covers the halving of the proposed period
of consultation when redundancies of over 100 people are being dealt with,
thus helping businesses to adapt more quickly to a changing environment.
The chapter on Raising Funds covers the emergence of such schemes to lend
money to businesses as the Business Finance Partnership, the National Loan
Guarantee Scheme and Finance for Lending Scheme. These initiatives are
helping to replace the funds which used to come from the high street banks
before their appetite for risk collapsed culminating in an enforced starvation
diet for some of their clients. The chapter on Leasehold Premises shows us how
insolvent businesses are now more likely to survive and to be sold successfully,
as pre administration rent is confirmed as an unsecured claim as opposed to a
cost of the administration.
As regards balancing the nation’s books the chapter on Pension Law introduces
us to the new environment of vastly increased employers’ workplace pension
vii
Foreword to second edition
obligations. The chapter on Pre-Packs reminds us that whilst it is important
for the nation to be able to dynamically reprocess its ailing businesses and get
them back making a contribution to the country’s coffers, it is important that
this process inspires confidence and trust in the business community through it
being transparently honest and fair. And, on the technical side, Chapter 1 briefs
us on the confused state of the case law dealing with the process of putting
companies into administration and reminds us of the common sense approach
as to who to give legal notice to in such circumstances … everyone!!
The world and business have become more regulated and complex. There is
no place for flabby companies and woolly thinking. Ken’s and Susan’s book
reflects this changing environment and is keenly to the point and focused
on briefing its readers as to what they need to know in order to successfully
restructure a distressed business, whether they are selling or buying one.
Finbarr O’Connell, Smith & Williamson LLP
http://www.smith.williamson.co.uk/
May 2013
Smith & Williamson is a leading independent provider of investment
management, accountancy, tax, corporate and financial advisory services to
private clients, corporates, professional practices, and non-profit organisations.
With 11 principal offices in the UK and Ireland, 1,500 people and an
international capability in over 100 countries, its aim is to provide an innovative
global service.
Finbarr O’Connell is a partner in the Restructuring and Recovery Services
department at Smith & Williamson. He has 30 years’ restructuring and
turnaround experience at the highest level. He is a specialist in Fraud and Asset
Tracing work and is constantly surprised that nothing surprises him anymore.
Finbarr is a past president of the Insolvency Practitioners’ Association and
is a Fellow of the Institute of Chartered Accountants in Ireland. He is also a
Licensed Insolvency Practitioner.
viii
Preface
When writing the preface to the first edition of this book in 2010 we noted
that since the idea was first mooted to write the text, the business and political
landscape and the law in which the subject matter of the book sits had developed
rapidly. In the preface to the second edition in 2013 we identified certain key
themes prevalent at the time, including high profile insolvencies in the UK,
concern about pre-pack administrations, the courts balancing the interests
of landlords and tenants and companies looking to downsize their property
portfolios using an insolvency process. On writing the third edition in 2022
it seems that a lot has changed since the earlier editions, but at the same time
nothing has changed. The restructuring and insolvency world is still grappling
with the same issues.
There have been some very significant changes in insolvency law since 2013.
A brand new set of Insolvency Rules came into effect on 6 April 2017. The
recast EU Insolvency Regulation, in force from June 2015, applied to insolvency
proceedings from June 2017. The Corporate Insolvency and Governance Act
2020 (CIGA 2020) came into force on 26 June 2020 with a series of temporary
and permanent measures expanding the toolkit available to companies and
practitioners navigating a way through the unprecedented economic impact
of the covid-19 pandemic. Then there was Brexit, and the impact of the end
of the transition period on 31 December 2020; plus, the Pre-pack Regulations
coming into force on 30 April 2021. Not to mention the indirect impact of
other legislation such as the National Security and Investment Act 2021 and
the Pension Schemes Act 2021. However, many of the drivers to change
remain the same as when previous issues of the book were published. In recent
years we have continued to see high profile business failures, such as House
of Fraser and Debenhams, caused by external pressures and changing market
conditions. We are currently witnessing a rapid rise in insolvency numbers
since the business support measures put in place during the covid-19 pandemic
came to an end, followed by significant rises in energy and other costs and
a shortage of labour putting many businesses under severe operational and
financial pressures. Tensions continue to exist between landlords and tenants,
with company voluntary arrangements (CVAs) still prevalent and landlords
being asked to reach settlements on rent arrears under the covid rent arrears
arbitration scheme.
CIGA 2020 introduced two entirely new permanent insolvency processes, the
Part A1 Moratorium and the Restructuring Plan. The government published
an interim report on the new procedures on 21 June 2022, concluding that
although the Part A1 Moratorium had been used successfully there were
significant concerns as to the unintended consequences of changes to priorities
on a subsequent insolvency. However, the Restructuring Plan had, according
to the report, been a success, building on an existing body of case law
governing schemes of arrangement with the addition of cross-class cramdown.
Nonetheless, Restructuring Plans were seen as expensive and time consuming
ix
