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Topic starter
03/05/2012 11:57 pm
I've been following the whole Rangers FC administration circus for quite a while now, and with today's developments it has got me thinking. The potential new owner of rangers fc plans to create a new 'incubator' company to transfer all the assets to, then pursue a CVA with the old company. By doing this it means the creditors will get far less return and the new company retains all the assets. Is this legal?
If this is normal practice in corporate insolvency, can it be implemented into personal insolvency? Let's say someone had a house, fancy car and a mountain of unsecured debt. Can this person transfer all their assets to a very trusting friend or family member then pursue down the trust deed route, pay very little to their creditors, get discharged after 3 years or so, then have their assets returned and debt free.
Surely this would be deemed illegal and somewhat fraudulent on a corporate and personal level or is this just another way our system is abused?
I am very intrigued to hear from the experts on this.
04/05/2012 12:46 am
I'm not an expert.
But, I'd have thought that if all insolvency were the same, then we'd just talk about 'insolvency'.
By talking about 'corporate insolvency' and 'personal insolvency, there's already a suggestion of difference. And different approaches.
'Corporate insolvency' appears to have a number of different categories - going by what I've read about the high-profile corporate insolvency you mention!
I know that 'personal insolvency' has different categories. Sequestration and Protected Trust Deeds are both 'personal insolvency'. They are not identical.
I don't think it's fair to ask identifiable professionals "Is this proposed solution to a high-profile corporate insolvency case 'legal'?" That's for the parties involved in the actual case to deal with.
04/05/2012 8:21 am
Hi Big al
I do personal and corporate insolvency and the 'incubator' spin is absolute PR nonsense.
Corporate & Personal insolvency follow pretty much the same path believe it or not. In the current situation, ( very generally) a single entity owns assets and owes debts. Someone pays £x for the assets and these are then held by a new company. They then try to get creditors to agree a payment using the £x they received in full and final settlement.
Two things will happen, either the creditors agree to accept and the company continues or they don't and the company is liquidated. The asset position is irrelevant in both scenarios. If the company is liquidated, then that is the end of things and the former company no longer exists. If it is accepted, the company continues as is.
I've been involved in countless liquidations, administrations etc etc and the only variation in the current scenario ishow it's reported. Incubator insolvency does not exist, it's merely an insolvency practitioner selling the assets of a distressed company and hoping creditors accept a pence in the £ deal. Nothing more.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
Topic starter
04/05/2012 9:32 am
Can creditors block an asset sale if they think the assets have been sold too cheaply? As selling 3-4 players alone would generate £10-12m not to mention The stadium and training facilities. Surely the creditors would get more if they liquidated the company with assets intact.
04/05/2012 9:57 am
Hi Big_al.
I'm not sure how much the experts here will want to get into this subject.
It's certainly very interesting, but it's also quite off-topic for a forum based around personal debt solutions and personal insolvency.
I'm sure there are plenty of other forums where it's being discussed a lot (in a pretty lively fashion perhaps!).
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