Buying a business from an insolvency practitioner
Buying a business from an insolvency practitioner

The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:

  • Buying a business from an insolvency practitioner
  • Insolvency practitioners
  • General considerations in purchasing an insolvent business
  • Which type of insolvency proceeding?: issues to consider
  • Which type of assets are for sale: issues to consider
  • Employee issues

Buying the business and/or assets of a company from an insolvency practitioner (insolvent sale) is quite different from buying the business and/or assets of a company which is solvent (and is therefore purchased from the owners of the company in the usual way). While this note generally refers to a purchase of a business and assets from an insolvency practitioner, many points also apply to the purchase of shares from an insolvency practitioner. For more information on the office-holder's point of view see Checklist: Sale of business as a going concern—checklist of information and Trading a company in administration—the office-holder's point of view.

Headline points to note which differentiate an insolvent sale from a solvent sale are that:

  1. the insolvency practitioner’s solicitors produce the first draft of the sale agreement, rather than the buyer

  2. it is very unlikely that any representations or warranties are given, and any given would be very limited

  3. the statutory terms and conditions for the protection of a buyer implied by the Unfair Contract Terms Act 1977 (UCTA 1977) will be explicitly excluded

  4. usually no title guarantee is given

  5. the buyer usually takes the assets (or shares) subject to any defect in title or encumbrances that may exist

  6. the buyer often indemnifies the seller and the insolvency practitioner in respect of claims concerning the business and assets

  7. the