What is the difference between going concern and forced sale value?

Going concern value assumes the business continues to trade and its assets retain their operational value. Forced sale (or break-up) value assumes the assets are sold individually, typically at a discount. The distinction is critical in insolvency - an administrator must demonstrate they achieved the best price reasonably obtainable, which may require expert evidence on both values.

When is a valuation expert needed in wrongful trading claims?

In wrongful trading proceedings under Insolvency Act 1986 s214, the court determines from what date the directors knew or ought to have known there was no reasonable prospect of avoiding insolvent liquidation. A valuation expert may be needed to establish the company's financial position at that date and the quantum of the contribution sought.

Insolvency & Administration Business Valuation Expert Witness

Insolvency proceedings raise distinct valuation questions: going concern value versus forced sale or break-up value, the adequacy of administrator marketing efforts, and whether antecedent transactions were at undervalue under Insolvency Act 1986 section 238.

Wrongful trading claims under section 214 require evidence of the company's financial position from the date directors knew or ought to have known insolvent liquidation was unavoidable. Valuation experts establish asset values, maintainable cash flows, and quantum of contribution sought.

Preference payment and transaction avoidance claims may turn on whether consideration received was substantially less than value given - again requiring independent valuation opinion.

Common questions

What is the difference between going concern and forced sale value?: Going concern value assumes the business continues to trade and its assets retain their operational value. Forced sale (or break-up) value assumes the assets are sold individually, typically at a discount. The distinction is critical in insolvency - an administrator must demonstrate they achieved the best price reasonably obtainable, which may require expert evidence on both values.
When is a valuation expert needed in wrongful trading claims?: In wrongful trading proceedings under Insolvency Act 1986 s214, the court determines from what date the directors knew or ought to have known there was no reasonable prospect of avoiding insolvent liquidation. A valuation expert may be needed to establish the company's financial position at that date and the quantum of the contribution sought.

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