Can I buy back company assets during or after liquidation?

Can you purchase the assets of a company after liquidation?

Liquidation is when a company sells its assets and uses the money to pay back creditors, either in full or partially. These assets are usually sold through auctions, once their value has been determined by the liquidator.

The liquidator’s main job is to ensure that creditors get back as much money as possible. To do this, they get the company’s assets valued professionally to make sure they fetch the best prices.

But who buys these assets? It could be someone starting a new business or directors of another company who need specific assets like office gear or vehicles.

 

Who purchases the assets of a liquidated company?

In certain situations, a competitor of a company might buy some of its assets during a liquidation sale, or unrelated individuals or businesses might also take advantage of this opportunity. There are several potential buyers in such cases, including the directors of the company being liquidated.

But how can directors of a liquidated company buy its assets, and what’s the process?

 

How do I go about repurchasing my company’s assets?

When a company goes through insolvency and enters liquidation, the person in charge is obligated to raise as much money as they can for creditors by selling off assets. That’s why they can consider a director’s interest in buying back the company’s assets during or after liquidation.

However, there are specific conditions that must be met before such a transaction can occur. One crucial aspect in this scenario is getting the asset(s) professionally valued.

 

Ensure assets are professionally valued before repurchasing them.

Setting a fair market value before selling is crucial, as it helps reduce losses for creditors. The liquidator will hire a professional valuer to assess the value of each asset before auctioning it or considering a director’s purchase.

But why would you consider buying back company assets when your business is being liquidated?

 

What’s the point of repurchasing your liquidated company’s assets?

You might be planning to move on and take up a director role in another existing business, or perhaps start a completely new venture, known as a ‘newco’, using the assets up for sale. For instance, if a construction company goes insolvent before finishing a project, the directors might create a new company.

By purchasing the assets of the old company, like cement mixers and JCBs, the ‘newco’ can run smoothly, making the transition relatively seamless. As long as the buying price is not less than the professional valuation, the deal can proceed.

 

The process of repurchasing assets is carefully regulated.

Stringent insolvency laws in the UK are in place to safeguard creditors of failed businesses. That’s why, when a company undergoes liquidation, the office-holder examines its directors to ensure misconduct didn’t contribute to the business’s collapse.

If company assets are repurchased at a price below fair market value, it’s considered an ‘antecedent transaction’ and can be undone by the liquidator. When buying assets from your failed company using personal funds, the transaction must occur during or after liquidation, not before the liquidator is appointed.

If such a transaction happens before, it will be uncovered by the liquidator during their investigation into the company’s failure. The deal will be reversed, and your actions might lead to allegations of misconduct.

 

Read More: 

• What is a Members’ Voluntary Liquidation
• What are Contingent Liabilities
• What is Business Asset Disposal Relief in an MVL
• Solvent Liquidation: Advice for Shareholders and Directors
• What is a Distribution in Specie 

 

Get professional guidance before repurchasing your company’s assets.

Getting professional insolvency advice is strongly recommended if you’re considering purchasing any of your company’s assets using your own money. Once the liquidator takes charge, they will oversee the company and ensure that each asset is valued fairly.
Vanguard Insolvency can offer additional assistance and guidance if you’re uncertain about your position as a director in this scenario. We provide free same-day consultations and have a wide network of offices across the country.