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Breaking up isn't easy

03 August 2006
Issue: 4069 / Categories: Forum & Feedback

Our client company has traded successfully for 15 years and owns its trading premises. There is the possibility of selling the trade in the near future (i.e. in less than twelve months) for approximately £2 million; however, the sole shareholder/director wishes to retain the property. Obviously, a share sale will be preferential to the shareholder.

Our client company has traded successfully for 15 years and owns its trading premises. There is the possibility of selling the trade in the near future (i.e. in less than twelve months) for approximately £2 million; however the sole shareholder/director wishes to retain the property. Obviously a share sale will be preferential to the shareholder.
The company is considering whether to use a reconstruction under Insolvency Act 1986 s 110 to separate out the trade and property into two separate companies. However our understanding is that as the whole or part of the company's business has to be distributed it will be necessary to have a separate business of letting the property prior to the s 110 reconstruction.
Thus the possibility of hiving down the trade into a 100% subsidiary and letting the premises from the holding company to the subsidiary has...

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