through a Deed of Company Arrangement. This often creates a statutory bar to creditors effectively drawing a line in the sand negating or limiting the need for extensive due diligence and reducing the subsequent costs and delays of asset transfers to a new entity.
The benefits of acquiring a business through a Deed of Company Arrangement are fourfold:
- A deed of company arrangement does not attract stamp duty on asset values.
- The Deed of Company Arrangement is a compromise of liabilities and does not consider the value of assets, such that the assets can continue to be carried at the book value.
- As there is no transfer of contracts from the company, the time costs and risks around achieving an assignment of customer, supplier and landlord contracts is eliminated or limited.
- To the extent the acquirer continues the same business, accrued tax losses less any debt forgiveness will be available to the purchaser.