Pre Pack Company Administration

In addition to a traditional administration, some businesses may prefer to look into arranging a pre-pack administration. A pre-pack administration can be used to enable the business and assets of the company to sold to either a new company (this can also be referred to as a newco or phoenix company) or to an existing company. The definition of a pre-pack administration means that an agreement has been entered into for the sale of the business whereby all valuations, due diligence, finance, etc has been arranged prior the appointment of an Insolvency Practitioner ("IP") who is to be the Administrator of the company. Upon the appointment of an Administrator the deal is effectively ratified without either shareholders or creditors consent. The sale allows for a seamless transaction so that the company can continue trading without any disruption to the customer base. A pre-pack sale usually allows the employees of the insolvent business to be transferred to the purchasing company without the need for any immediate redundancies.

Pre-packs are regulated through the issue of Statement of Insolvency Practice 16 ("SIP") which effectively is a code of practice that Insolvency Practitioners abide by. The SIP lays down details on how the Insolvency Practitioner should disclose to creditors details of the sale.

For more information on companies we have helped in these difficult situations, please click here.