A pre pack is when the business is sold by the administrator to management or a third party purchaser either immediately upon his appointment or within a few days.
It is a useful tool when the type of business means that ongoing marketing by an administrator may damage its goodwill and value.
What are the advantages of pre pack administration?
One of the main advantages of this administration is the permanency of the “business”, as the business is protected by the courts, giving the administrator the power to sell the business and all of its assets. It writes off the debts of the existing company with no interruption to the trading business.
If the newco turns out to be the previous directors of the business then it may often generate negative publicity, as it is often frowned upon, despite it being a legal arrangement. It’s important to remember that other options may include liquidation, whereby employees may lose jobs and the business does not continue trading.
Let us provide advice on pre pack administration for your company
We are experienced in administrations and pre pack administrations and can advise you on which course is right for your business – contact us today if you believe this may be appropriate for your business. For more information on business administration, click below or call The Insolvency Experts on 0300 303 8284.