Often when faces with the insolvency of a company, the directors will sell the business to a related entity and then place the company in liquidation. Whilst this is not uncommon, it often raises some serious legal problems for the company and the directors, and will sometime not give the directors the result that they desired. It is also problematic for a company to enter into a transaction for the purpose of defrauding creditors.

If a business restructure or recovery is required, then it is essential to obtain proper advice beforehand.