The arrangementusually results in debt being written off allowing the company to home elevator trade into thefuture.Pre Pack Administration or phoenixingA pre pack allows a new company to purchase the assets of the old and startto trade without the burden of any legacy debt, the old company usually beingliquidated.

A pre pack can give a company the best chance of survival where debtis pushing it towards failure.These options raise the question aren't business debt solutions simplypassing the problem around?The argument against solutions such as Company Voluntary Arrangement and PrePack Administration is that the creditors lose out and the business just dodgesits debts.

This is true, however, it must be considered in the light of the alternative- the total failure of a struggling business. The closure of the strugglingcompany would almost certainly result in unsecured creditors receiving noreturn, cause staff to be made redundant and give no opportunity for trade inthe future.A CVA or pre pack administration at least offers some return and theopportunity for the business to remain trading.Cash has to be king and top priority for many companies in 2010 and 2011.Those that do it well will survive. Those that do not are likely to fall.As such identifying problems and implement solutions which may require aradical restructuring of debt must be a priority.

Ms. Granger's Dear Diary