Robust accounting and legal advice are essential for each hive. A robust due diligence process is required. The purpose of a hive is to preserve the value of a failing business by transferring the valuable parts of the business (the queen of bees and honey) to a subsidiary. The shares of the subsidiary or the assets are then sold to third parties. An asset or the entire transaction can be transferred to a newly created subsidiary of Topco. Let`s call it “Bottomco.” It has a new balance sheet of its own, no existing liabilities, but of course no rating. An “hive-down” involves the transfer of the most valuable parts of a company (which is generally insolvent) to a wholly owned subsidiary and the sale of the subsidiary. Therefore, legislation that allows a business to sell without unbundling costs does not allow a value of depreciation of value (TWDV) to rise/fall at market value (as was the case for the increase in the basic costs of taxable assets). Newco will continue to hold the initial TWDV for the assets (which it inherited from the company) and will therefore continue to be taxed on any future sale of the IFA on the basis of the difference between the TWDV (in the event of sale) and the products received. A number of recent restructurings have been carried out as part of a “follow-up. A hive down usually includes three important steps: a hive-down is legal. However, the circumstances must be carefully considered before being implemented.

An hive-down process can facilitate the arrival of a new equity investor who does not want to be exposed to the old company structure and debt. In addition, it can often be achieved with less unanimous lender approval (as discussed below). Hiving-down is a time-taking process and, in reality, it may be more prudent for a beneficiary to do the business through the bankrupt company. In addition, the recipient may encourage an auctioneer to sell the and assets at an auction. This may be a problem when previous intragroup transfers have occurred, particularly where there is a hive scenario. A hive before a sale can be considered if the target company has a business that the buyer wants, but that target company has been operating for many years in many different forms and has historical trades and tax issues or other potential liabilities. The seller would be happy to sell the target company, as the tax liabilities remain within that company and move away from the potential risk by selling the shares (subject, of course, to a secondary liability or compensation or tax alliance between the buyer and the seller). The buyer, of course, only wants trade and not additional risks. The restructuring risks causing a “change of control” that could lead to the termination of rights to the operating company`s banking or commercial agreements. It is therefore advisable to carry out a complete due diligence before the refinement. An asset or the entire transaction may be passed on to a third-party company in exchange for the money or shares.

This situation is more complex than a hive and requires careful planning and legal advice to avoid “undervalued value transactions,” which is a violation of the s23 Insolvency Act 1986. Legal advice is essential in addition to the creative advice of CVA experts.