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How to find a buyer for a business – strike whilst the iron is hot

At 21 and fresh from University I joined Portland, business rescue and corporate recovery was an area I wanted to get in to and I liked how the firm worked.  After years of studying and 12 years of hard work and practical experience on 1st October 2015 I was granted my practicing licence to be an insolvency practitioner.  Although most may hear the word insolvency practitioner and think of companies closing down, I think of how to take a company with cash flow problems and be able to put a successful turnaround in place.  On 8th October 2015 I was appointed joint administrator of Breakers, a community interest company in Andover, Hampshire and had this in mind.

The company was set up a year ago as a ‘not for profit’ organisation to offer entertainment for people of all ages, sexes and abilities, to bring the community together in a convenient and safe environment.

The directors planned to work alongside local charities including Andover Mind, The Junction, Neighbourcare, VIP’s and PAPYRUS to improve the lives of the youth of Andover.  Alongside the entertainment facilities, including ten pin bowling alleys, a café and music, the intention was to provide somewhere for the youth to go where they could be signposted to deal with personal challenges.

Despite the initial idea being met positively, the company has suffered from a lack of funding, which has meant that debts have not been paid in full, and in particular the company has not been able to pay HMRC on time.

Due to the lack of available funding the directors of the company have been trying to find a buyer who could invest more money and take the company forward. While there has been interest, the interested party advised that they would be unable to buy the company in its current form, in part due to its debts.  The directors immediately took advice and concluded that the company did not have sufficient funds to continue to trade and therefore took the decision to cease to trade and place the company into administration.

Although trading has ceased in the meantime, we contacted the original interested party and have already had expressions of interest from several interested parties in buying the business.  We are therefore hopeful that a deal could be done to save the business and ensure this valuable facility continues for the community.

By contacting these parties at an early stage, they are far more likely to be able to get the facility back up and running.  With the protection of administration creditors cannot take action against the company whilst a buyer is found, giving the company much needed breathing space it would not have had.

It is not yet known what the level of offers but would expect to complete a deal within the next week.  A sale of the business will mean that the facility is saved and hopefully result in a return to the creditors.  Without administration the assets would have simply been sold with no return to creditors and Andover would lose a vital facility.

We are currently considering whether it may be possible for a purchaser to buy through a Company Voluntary Arrangement and therefore save the company as a going concern.  By taking the step to place the company in to administration at an early stage, it is likely that this will in fact result in at least the business being saved.

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