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What is a Pre-Pack?
A Pre-Pack Administration is a process where the ‘deal’ to sell a business entering Administration is agreed prior to the formal insolvency process of Administration taking place – i.e. it is pre-packaged.
Pre-Packs often involve sales of businesses back to the existing management via a new company (newco) and therefore allow a seamless transition from one business to the next. The sale is not always to the existing management, it can be to a third party.
Utilising the Pre-Pack route is very useful where there are immediate threats to the viability of a business from creditors such as landlords, HM Revenue & Customs and the company’s bank, making it a very powerful tool.
The process involves the proposed Administrator obtaining at least one valuation of the business, which he will then use to assess any offers received. He or she will then ensure he/she complies with the required practice guideline of SIP 16 before agreeing to sell the business and consenting to act as Administrator. Both the purchaser and the seller will then need to appoint solicitors to guide them through the sales contract and appointment formalities.
Once in Administration the process of Administration and the Administrator’s role remains unchanged and he must act in the best interests of the creditors.
We can help you through the pre-pack process, so please get in touch.
To discuss your Pre-pack Administration call Philip Wood or Lucy Hill on 0845 050 4444 or at one of our local offices or email insol@bcr-insolvency.co.uk
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BCR offer insolvency services throughout Staffordshire, Shropshire, Cheshire and Lancashire with insolvency practitioners helping individuals and companies in Stoke on Trent, Shrewsbury, Telford, Bolton, Preston, Blackburn, Stockport and Manchester.