Acquisition of Assets by a Phoenix Company from the Failed Company

A professional valuation is the key to having a legitimate sale of assets from one company to another.

There are various classes of assets, that are not only the physical fixed assets held by the company.

Along with the main fixed and current assets of the business, you must consider:-

• the value of intellectual property

• the value of goodwill.

The above are not so easy to be valued and must have careful consideration before any transaction takes place.

The physical assets of the company can be valued on three bases:-

1. Forced sale

2. Open Market

3. Value to the business

A forced sale valuation is one which estimates the expected realisation of the assets if there were to be an auction.

An open market valuation will in most cases provide a higher value than a forced sale.

An open market valuation provides the expected realisable value for the assets if they did not have to be sold quickly and instead time was available to test the market for the best price.

If a director of the old company wishes to sell the assets to a phoenix company it must be at open market valuation.

Having said that, there is a further method of valuation called "value to the business" which must be considered. If that figure is higher than open market value, no sale should take place unless it is at that higher figure.

With proper advice in many instances it is possible to have such a pre-packaged asset sale even prior to the liquidation creditors meeting thus safeguarding jobs, your future and indeed maximising returns to creditors.