Company Rescue Services

Pre-Pack Administration

Pre-pack administration is a formal insolvency process which involves the sale of a business, or its assets, to a connected or unconnected buyer.

"From the first phone call to connecting with an advisor, the process immediately felt very professional yet approachable. The conversation I had with Gareth was very easy and very informative. It helped calm my anxieties surrounding next steps. I would have no hesitation in recommending The Insolvency Company."

– Director of a limited company

Who is a pre-pack administration for?

Pre-pack administration is a formal insolvency process designed to facilitate the swift sale of a business, or its assets, to a buyer, who may be either connected or unconnected. Unlike conventional administration, where the sale process begins after the appointment of the insolvency practitioner, pre-pack administration involves negotiating and agreeing to the sale beforehand.

Once the insolvency practitioner is formally appointed, the sale to the new company is immediately completed, ensuring a seamless transition. Following this, the old company will be liquidated. This process can be particularly beneficial in preserving the value of the business and safeguarding jobs while providing a fresh start under new ownership.

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Benefits of a pre-pack administration

Business continuity
Being sold as a 'going concern' ensures that business operations can continue smoothly without significant interruption. This approach safeguards the value of 'work in progress' and maintains customer goodwill, which are crucial for the success of the new company. Additionally, it helps to prevent losses that could negatively affect creditor returns, thus contributing to a more favourable outcome for all parties involved.
Brand image is maintained
Pre-pack administration can often help avoid the negative publicity associated with other insolvency procedures. By maintaining a positive public perception of the business's brand, jobs can be preserved, and the new company is more likely to experience improved cash flow. This financial stability enhances the ability to pay suppliers promptly, contributing to increased sales and fostering long-term growth for the new business.
Focus is on the future
With pre-pack administration, investment can be directed towards building the new company rather than being consumed by historic debt. Furthermore, contracts related to equipment hire and property leases that were burdensome for the old company can be terminated, releasing valuable working capital to help grow and strengthen the new business.
Reduced costs of administration
Thanks to the speed of a pre-pack administration, the associated costs are often lower compared to a standard administration procedure. By conducting due diligence before the company's financial issues become widely known, costs are further minimized, making the process more cost-effective.
A degree of control is maintained by directors
In pre-pack administration, directors retain a degree of control over the business, unlike other insolvency procedures. Selling the company to individuals already familiar with its operations and procedures enhances the likelihood of the business's future success.

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How does pre-pack administration work?

Pre-pack administration is a formal insolvency process that facilitates the purchase of an insolvent company’s assets. This procedure must be conducted by a licensed insolvency practitioner (IP) appointed as an administrator, with the appointment strategically occurring at a certain stage to enable a swift sale.

The rapid nature of this sale helps preserve asset values, save jobs, and maintain commercial momentum by ensuring largely uninterrupted customer service and continuation of supplier contracts. The assets are then transferred to a new company, or ‘newco,’ allowing trade to continue without the burden of unmanageable debt and creditor pressure.

Before a reliable quote can be provided for pre-pack administration, businesses need to be properly valued. Therefore, it’s crucial to exercise due diligence when seeking insolvency assistance. The Insolvency Company are licensed insolvency practitioners with extensive experience. We offer dependable, unbiased advice on pre-pack administration and can help you determine whether this is the best option for your business.

"Simply excellent, and I wouldn't hesitate to highly recommend. Honest, reassuring and exceedingly helpful during a tricky time. So glad I found Gareth and his company. Highly Recommended."

Company Rescue Services

Pre-Pack Administration