What is Pre-Pack Administration?
Pre-pack administration is where a company is prepared for a sale and a buyer for whole or a substantial part of the company is found prior to the company going into administration.
In some cases, an appointed administrator may determine that this is in the interests of the company’s creditors and the most effective option for rescuing the company.
With pre-pack administration, the company and its assets will be valued by an independent valuation agent and a market price for the sale will be agreed. The company will be advertised for sale anonymously (without the company being named) to establish any interest from competitors or others. The company’s directors can also offer to purchase some or all company assets to transfer to a newly established company (a ‘newco’). The process is designed to be open and fair, so the directors will be competing in the open market and will have to pay the market valuation. Once a sale is agreed, the company can be put into administration and immediately sold.
The advantage of a pre-pack administration is that it is designed to be a seamless transfer. This allows the company to continue trading, protecting jobs and saving a viable business from liquidation. Selling assets via a pre-pack sale can also maximise the amount of cash available to repay creditors.
To find out more about the pre-pack administration process and whether it is right for your business, simply contact us. We can look at your situation and advise you on the best course of action.