What is Pre Pack Administration?

What is pre pack administration, an insolvent company sells its business and assets to a new buyer company which is usually a new company with the same directors. This is a very quick and efficient rescue solution which can be used to preserve the business’s value and save jobs.

It is important to consider what is a pre-pack sale before making any decisions regarding insolvency options for your business. In order to be considered for a pre-pack, a resolution needs to be passed in a board meeting and the advice of advisors is usually sought.

Demystifying Prepack Administration: What Does it Entail

Once an insolvency practitioner has been appointed as administrator, they will start the process by seeking valuations for your company’s assets and preparing a Statement of Affairs (SoA) to present to creditors. The SoA will include a proposed timetable for the administration and an estimate of the costs associated with it.

The speed of a pre-pack sale allows trade to continue largely uninterrupted and can help to maintain business momentum, preserve customer, supplier and staff loyalty, and preserve brand reputation. It can also help to preserve the value of a business and prevent its value from plummeting once word gets out that it is insolvent. In addition, it can help to protect employee contracts and avoid the need for redundancies. However, it is important to remember that a pre-pack does not always address the cause of the problem and can still result in some staff losing their jobs.