Back to Press

Analysis of pre-packaged Administrations

Pre-packaged administrations (or pre-packs as they are otherwise known), have been the cause of much controversy in the UK over the last few years. A pre-pack is a deal for the sale of an insolvent company’s assets which is put in place before the company goes into a formal insolvency process. Most commonly it is used in conjunction with the administration procedure. The deal will usually have been agreed before the Insolvency Practitioner is appointed, but will be executed by the Insolvency Practitioner shortly after appointment.

Pre-packs are not new. They have often been used to sell businesses in insolvencies where commercial pressures require urgent action. However, there has been an increase in the number of pre-packs in recent years, and this has drawn attention to the procedure, and resultant criticism. The debate around pre-packs largely centres on whether or not this should be considered an appropriate and effective method of selling the business of an insolvent company – particularly in terms of extracting maximum value from a company’s assets for the benefit of its stakeholders.