What are Pre-Pack Administrations?
Prepack Administrations are a great solution for saving your business
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-Pack administration usually involve the sale of the company back to its original management via a new company (newco) and in doing so allows a simple transition from the old business to a new one. 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.
Contact us and we will take you through the prepack administration process.