Selling Stock in an Insolvency: What IPs and Directors Need From a Stock Buyer

An insolvency brings a stockholding into a process that was not designed around it. Plant, vehicles and debtors can wait for the timetable. Food, drink and FMCG carry date codes that do not. This guide sets out what a professional stock buyer brings to that situation: how a written valuation is put together, what evidence sits behind it, and what a realisation leaves behind on the file.

It is written for insolvency practitioners and for directors winding a business down, and it stays deliberately on the buyer's side of the counter. Nothing here is legal advice and none of it replaces the advice of your own insolvency practitioner or solicitor. For the commercial detail rather than the background, see liquidation and insolvency stock.

Why food and FMCG stock behaves differently to the rest of the estate

Four properties of the goods themselves shape every conversation about realising them.

• Date life is part of the asset. Short-dated stock loses value while a process runs its course, because the resale channels lawfully open to it narrow as the code date approaches. That is a characteristic of the product, not a reason to rush a decision that belongs to somebody else.
• Storage keeps billing. Rent, power and handling accrue for as long as goods sit, and chilled and frozen holdings depend on a cold chain that costs money to keep intact.
• Provenance decides who can buy it. Any lawful onward buyer needs to know where stock came from, how it was kept and what its batch codes are. Records that become separated from the pallets are hard to reconstruct afterwards, and stock without them is worth less to everyone downstream.
• A stockholding is rarely uniform. Most estates hold healthy lines, short-dated lines, part-processed material and an unglamorous residual tail, and those do not all price the same way or move through the same channels.

Who owns which question

Realising stock out of an insolvency raises two quite different sets of questions, and they belong to different people.

The legal questions belong to your own advisers. Whether goods on site are subject to retention of title, and whose terms bite. What your duties to creditors require of a realisation and how it should be reported. When a sale can properly happen relative to a formal appointment or proceeding. Those are matters for the insolvency practitioner and the solicitor acting on the case. A stock buyer is a counterparty, not an adviser, and should not be answering them for you.

The commercial questions belong to the buyer: what the stock is worth to genuine resale channels, what evidence sits behind that number, how the goods leave site and what paperwork comes back.

What a written offer contains

A document that creditors may read later is a different thing to a verbal indication over the phone. A written offer from this desk carries four things.

• Line pricing rather than a single number. Each line is priced to the channel that can lawfully take it, so a strong category is not averaged down by a weak one sitting on the same manifest.
• A date, and the manifest it was made against. An offer is a read of a particular stockholding on a particular day, and it says so.
• Named assumptions. What the offer takes as given about condition, dates, quantities and site access, so any later variance is visible rather than argued.
• A signature. Written, dated, line-priced and signed, in a form that can go on the file as it stands.

What an offer is not

An offer states what one buyer will pay on stated terms. It is not an independent valuation and does not present itself as one. Where a case calls for more than one number, being one of several offers on the file is a perfectly ordinary position for a buyer to occupy. Whether one offer, or several, is appropriate evidence for a given case is a judgement for the officeholder.

How a valuation is evidenced

A number is only as good as the record it was priced from. Four things carry most of the weight.

• What the stock is. Product description, brand and pack size, with quantities by case, pallet or load.
• What the dates say. Best-before or use-by dates, and batch codes where the records still hold them.
• What condition it is in. Seal and packaging integrity, and how the goods have been stored, including temperature history for chilled and frozen lines.
• Where it sits. Location, storage type and how the stock can physically come out.

Completeness protects the estate rather than the buyer. Gaps have to be priced as risk, and risk priced blind is priced conservatively, which costs the estate value it might otherwise have realised. A fuller record narrows that margin. The full list of what a stock list should carry, along with the categories this desk trades in, is on what we buy.

Whole estate or part of it

Both shapes are ordinary, and neither is the right answer in the abstract.

Whole-estate realisation puts one counterparty against the entire stockholding, with one clearance plan and the residual tail included, so nothing is left on the racking for a landlord to deal with afterwards. It tends to suit cases where site access is finite and a single documented transaction is easier to report than several.

Partial realisation takes one category, or one problem, and leaves the rest to other routes. Officeholders sometimes prefer it where different parts of a stockholding have genuinely different markets, or where another realisation is already under way.

Which fits depends on what else is happening on the case, and that is a matter for the insolvency practitioner rather than the buyer. It is worth saying which you are testing when you send a list, because it changes how the lines are priced.

Discretion, traceability and what stays on the file

• Confidentiality first where a case is unannounced. We sign NDAs before names, and redistribution runs through channels chosen so that surplus does not surface against the seller's primary listings.
• Traceability handed over intact. Batch codes, date records and cold-chain documentation travel with the goods, and copies come back for the file rather than disappearing with the pallets.
• A documented end for everything. Lines that cannot lawfully be sold are routed to accredited animal feed or anaerobic digestion partners, with the paperwork returned, so the file records where every part of the stockholding went.
• Payment terms are agreed per deal and written into the offer. In insolvency matters the desk can discuss arrangements where funds clear before goods move, which is frequently the order a case expects. Whatever is agreed is what the offer says.

Next steps

1. Speak to the insolvency practitioner and solicitor acting on the case about retention of title, duties to creditors and the timing of any sale. Those answers frame everything that follows.
2. Assemble what the stockholding actually is: a warehouse system export, a stock report or a plain spreadsheet. What we buy sets out what a useful list carries.
3. Decide whether you are testing the whole estate or a part of it, and say which.
4. Send the list and get a stock offer in writing, with an NDA in place first if the case is unannounced.

If it is easier to talk it through before anything is written down, contact the desk.