Generally speaking, it will be the directors of a business who initiate the pre-pack administration process. As such, it is likely that they will appoint themselves as directors of the new phoenix business and continue to run the new company.

Where the company directors are not involved in setting up the new company, they may be offered positions in the new business under TUPE law. However, in reality it is unlikely that they will remain with the business and that they will choose to resign or take redundancy from the business. 

Directors report undertaken

Once its assets have been sold, a liquidator will be appointed to close the old company.

As with any standard company liquidation process, one of the roles of the liquidator will be to investigate the conduct of anyone who has acted as a director of the company in the last three years (or any person who seems to have acted in the capacity of a director).

The liquidator must report on the conduct of each director and decide whether there is any reason to suggest that they are guilty of wrongful trading (allowing the company to trade while knowingly insolvent). 

If such a claim is upheld, the associated director could be struck off as a director and held personally liable for company debts.

HMRC VAT deposit may be required for Phoenix busines
If any of the directors of the new phoenix company are the same as those involved with the old business, it is possible HM Revenue and Customs will required a security deposit before granting the new company VAT registration.

This is because the directors may be associated with nonpayment of business taxes as a result of the old business being liquidated given outstanding VAT or other tax was left unpaid.

If a VAT deposit is required, the new business cannot start to trade legally until this is paid. The deposit will normally be calculated based on between 4 and 6 months of VAT which would have normally been paid by the old company.