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While both of these insolvency processes are governed by the same legislation, there is one key difference – namely the timing of the sale of the business/assets. A Pre-Packaged sale of a business is the strategy employed by the Insolvency Practitioner (IP) as part of the Administration Process. In brief, a sale of the business and/or assets is agreed either immediately prior to or immediately upon the appointment of an administrator. Pre-pack administration can be controversial in that the sale is usually agreed before an administrator is appointed, whereas in a regular administration the administrator starts marketing the business after being appointed. Pre-pack administration often (but not always) involves selling the business and assets of the old company back to its current directors via a new company. Advantages of pre-pack administration: Continuity – it enables a going concern sale which is less likely to impact on business operations upon appointment of an administrator. Preservation of asset value – assets such as goodwill, debtors, and work in progress are more difficult to realise once an administrator is in office. This preservation can improve the return to creditors. Cost – the quicker a sale can be achieved, and the less time the administrator is in office, the less the risk of depletion of any cash reserves while trading. Additionally, the costs of administration may be lower as the administrator is not having to incur time trading the business, again improving the return to creditors. Positive PR – less scope for adverse publicity, particularly when employees continue under the new company with the same legal rights (under TUPE). What are the downsides to a pre-pack administration? Funding – while an administrator may offer deferred terms of payment, remember that the purchaser will have to be able to afford the business and assets of the company entering administration. The new company may also be refused credit for a period of time meaning that working capital requirements must be considered. Losing the business to a competitor – the IP has a duty to achieve the best possible outcome for creditors. In complying with their duties, the IP must market the business for sale in order to receive the best offer. This can result in competitive bidding and the possibility that the business may be sold elsewhere.

Administration is an insolvency process by which a company is placed under the control of an insolvency practitioner to enable him to achieve objectives laid down by law. Company Administration Process Whilst your business is ‘in administration’, it is effectively under the control of ‘the administrator’ – it’s a period of time whereby the company begins to reorganise its affairs. The administrators may be appointed by either a lender (such as the bank) or the directors. The first objective of administration is to rescue the company so that it can continue trading. If the circumstances allow, the administrator will continue to trade the business in an attempt to try and put it back into a stable position. This can result in the reigns being handed back to the directors to continue as before.

If the rescue of the company is not possible, the administrator must try to obtain a better result for the creditors of the company as a whole, than would be likely if the company was put into liquidation. To assist in achieving these objectives, the company is protected from creditors taking or pursuing legal proceedings against the company while it is in administration.


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A ‘CVA’ is a Company Voluntary Arrangement with creditors, which allows the business to pay its debts off over a fixed period of time. The business continues to trade as normal and is protected from creditors taking action against it. Creditors tend to support businesses choosing to enter a CVA as the other option may result in little or no repayment of what they are owed. The CVA however must be reasonable and achievable.

To be deemed reasonable, a CVA proposal: Must be for a company that is insolvent but still viable Must be approved by 75% of creditors. Once approved, the CVA forms a legally-binding agreement that binds all creditors to the agreement, whether they voted in support or against the CVA.

If your limited company is insolvent, it can use a Company Voluntary Arrangement (CVA) to pay creditors over a fixed period. If creditors agree, your limited company can continue trading. For a CVA to be passed, at least 75% of unsecured creditors must agree to enter into the agreement. Creditors with security (such as banks) tend to be unable to vote as to whether in a CVA as their debt is secured. A CVA may be the ideal way to protect against legal actions taken by creditors. The terms of a CVA are likely to improve cash flow as creditors are bound by contract which often reduces monthly outgoings. When negotiating a voluntary arrangement, a full disclosure of the debtor’s assets must be made, and it is a criminal offence not to. The debtor must make an honest attempt to present a fair offer to the creditors. This offer is more likely to be approved if the outcome is better for creditors than the alternatives. The relationship you have with your creditors can significantly influence the outcome of the proposal. It is therefore crucial that discussions with these creditors are undertaken in a professional manner. If you believe that your business has a future, but needs some breathing space from pressing creditors, contact our team today to discuss this process. The earlier you make contact, the more we can help you.


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If you’ve received a winding up petition requesting a compulsory liquidation, the options available to you to stop or appeal the petition will depend on how quickly you take action after receiving the petition. You can take a number of steps outside of the courts to try and stop or adjourn the petition, or once the courts have issued a winding up order, you can apply to the courts to have the winding up order cancelled.

There are two situations in which you can cancel a winding up order: If your company is able to pay its debts and can prove solvency; or Where you couldn’t attend the original court hearing for the winding up petition. In both situations, you must make the application to cancel the winding up order within 5 working days of receiving the order otherwise, the application will be rejected. More information on this process is available on our Winding Up Petitions page.

Rescue Options

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Our financial experts have a wealth of experience in advising company directors on their financial options and whether or not their business can be rescued.

If you get in touch with us, we'll be able to assess your current business situation and discuss how to best protect your financial interests.