Pre pack administration process is an insolvency process where the directors of a struggling business can sell the company on to a ‘newco’, and it can be a powerful solution. However, it must be done correctly to ensure that the company’s assets are sold for a fair price and that all creditors get their debt repaid. This article provides a comprehensive guide to the process, offering an in-depth look at the advantages and disadvantages of this option.

It is essential to understand that the pre-pack process can be complicated. It’s a good idea to seek advice from insolvency practitioners and lawyers, who can provide advice on the best course of action for your distressed company. They will be able to advise on the options available, including a pre-pack, trading administration, company voluntary agreement, scheme of arrangement and liquidation.

Insight into the Prepack Administration Process: Step-by-Step Guide

A key concern with pre-pack sales is that the sale often takes place without the knowledge and approval of unsecured creditors. This can lead to a lack of transparency, and it’s important that the administrators can prove they made their decision in the interests of all creditors. This is why it’s so important to carefully document the details of any valuations and marketing done during the process.

In addition, the TUPE legislation (Transfer of Undertakings (Protection of Employment) regulations) will typically apply during the pre-pack administration, so any employees will retain their current roles in the new company. This can result in significant costs to the new business, particularly with monthly wages and other employment costs.