Pre-Pack Administration: A legitimate means to restart an Insolvent Company?
If your company is struggling to pay its debts, but viable if it could be restarted, then a pre-pack administration may be the right solution for you.
A legal insolvency procedure, pre-pack administration allows a company to be liquidated and sold to a new board of directors, often made up of the previous company’s.
What is Pre-Pack Administration?
A pre-pack administration (or sale) is a process where the directors of an insolvent company sell an existing insolvent business and its assets at market value to a new or related company, often made up of the same directors. These directors can then hire existing employees and produce the same goods or services from the same premises.
In essence the company is restarted without any of its previous debt, effectively preserving an insolvent company in a new but unchanged form. Pre-pack administrations are common in the UK with over 100 pre-pack sales every month; national examples of pre-pack administrations include retailers: Whittard of Chelsea, La Senza and The Officers Club. A summary of the pre-pack process can be found below.
If you believe a pre-pack administration is right for you or if you’re looking for other business recovery and turnaround options, or procedures to wind up an insolvent company, contact us for free professional and confidential advice.
