Publications

Pre-Pack Administration to the Rescue

In the current economic climate, Administration is becoming increasingly popular. Last year 4822 companies went into Administration. 2018 of these were in the final quarter.  Many businesses are turning to pre-pack Administrations.

What is pre-pack Administration?

Pre-pack Administrations allow a business to be sold without creditor’s approval, thereby protecting the business from creditor attack in the process.  Prior to the Administration, discussions are held between directors and insolvency practitioners (IPs) to agree a deal to allow a sale of the business, normally to be completed immediately after the IP’s appointment using the out of court procedure. As creditors are not privy to this process, they could be forgiven for thinking they have been left in the lurch with unpaid bills.

It should be remembered however that under The Statement of Insolvency Practice (SIP) 16 (introduced on the 1^st January 2009) IPs are under a strict duty to try to secure the best outcome for creditors as a whole, which in most circumstances is why they can justify a pre-pack sale to those who previously owned and ran the business.

Even with the introduction of the SIP, the use of pre-pack Administrations will continue to flourish as the best possible means to rescue a business. Colman Coyle has a specialist Insolvency, Business Recovery and Restructuring department who can represent you throughout the process. We will work with our introduced or an IP to ensure the end outcome matches your desired result.

Author: Georgina Kyriacou

Publication: London Chamber of Commerce Business Matters Magazine

Date: April 2009