A viability review or statement can be provided by a connected party that wishes to make a pre-packaged purchase of business and assets. It must state how the purchasing entity will survive for a least 12 months from the date of the proposed purchase.
In more detail
A viability statement is an option introduced by the UK insolvency regulators by Statement of Insolvency Practice 16 (SIP16). SIP16 was introduced to prevent perceived possible misuse of pre-pack administrations sales.
The connected party should consider providing a short narrative detailing what the purchasing entity will do differently in order that the business will not fail. The contents of this statement will be disclosed to creditors and attached to the SIP16 statement.
However, this is only an option and does not have to be provided. Most connected parties choose not to and in our 30 years of doing Administration we have never actually seen one!
That said there is no choice about having a pre-pack sale to a connected party scruitinised by an independent Evaluator.
If you would like advise on pre-pack administrations contact our experts who can help guide you through the process, call us today on 0800 254 5494