“Depending on your situation, if a company is in financial difficulty, you may be able to transfer the ownership of that business or company to another person or company,” says Jeremy. “You need to sell the business at market value and use this as a means to pay back your debts.” A sale can include selling intellectual property or tangible assets such as premises or equipment, customer lists and graphic elements such as logos.
If your business still has genuine value. “You cannot use this as a way to get around paying people what you owe them,” says Jeremy. “There are many laws that are in place to stop this from occurring. If the transaction can be shown to be designed to defeat creditors or be uncommercial then it can be overturned.”
Make sure you do your homework. A PwC survey found a startling lack of preparation among companies that were hoping to be acquired. Although the companies tended to be up to date on taxes, less than a quarter had audited their financial statements, and only 11 per cent had completed a formal valuation.
Nasty Gal. After Sophia Amoruso’s edgy fashion empire announced it was filing for “bankruptcy protection” to reorganise its affairs as a result of declining sales, the online retailer Boohoo bought the rights to its intellectual property – Nasty Gal’s brand name, URLs, social media accounts, imagery, and soft assets – as well as its customer database, for US$20 million. It didn’t, however, assume responsibility for store credit owed to customers.