Pre-Pack Administration

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A Pre Pack Administration is a process whereby the assets and business of a company are sold before the company is forced to enter into a formal insolvency process such as liquidation.

Pre Pack administrations are a popular tool used by many businesses. A company that incurs a sudden large debt e.g. an unpaid tax bill, or is not paid by a large customer – therefore causing cash flow problems, can resolve these issues without needing being forced into an specific direction by creditors. 

The process involves an Insolvency Practitioner, Accountant or Business Turnaround Expert being appointed by the directors of the company, and taking on the task of selling the companies assets and placing the company into administration. After the appointment of an administrator, the assets, and day-to-day trading of the business can be purchased by a new company, or indeed a competitor, who can continue to trade without the burden of debt incurred by the previous company.

In order for a pre pack administration to run its course, the appointed administrator will liase closely with the secured creditors to ensure they consent to releasing or changing the charges they hold over the companies assets.  Unsecured creditors are usually informed of the process once it has taken place.

The advantages of this process is that valuable members of staff can be retained, connections with suppliers can be saved ensuring future supply, and customers can be kept.

It is essential to ensure that landlords, banks, suppliers, staff and customers are all dealt with in a respectful manner that will enable the new company to flourish. At Real Business Recovery we have the knowledge and experience with liquidation matters to help you through this process and ensure your business needs are met.