Rescue Your Company

Administration is a formal insolvency process that puts a company under the control of an external administrator to see if the company can be rescued and if the owners can turn things around. Alternatively a pre-pack sale can often be arranged if it is the best outcome for all parties. Administrators can be appointed by directors, shareholders or even floating charge holders and other creditors. The administrator’s job is to protect their interests and if the business can’t be saved, will close it and look to sell company assets to obtain the best value for stakeholders.

Understanding pre pack administration

Pre-pack administration is a formal insolvency rescue process which involves the sale of a business, or its assets, to a buyer. With a pre-pack, the buyer is often connected to the existing company operating via a new company – or ‘newco’.

Pre-pack administration – also known as pre-packaged administration – differs from a conventional administration process as the sale is negotiated and agreed to prior to the insolvency practitioner being formally appointed. The sale of the business and/or its assets to the new company completes as soon as, or very shortly after, the formal appointment of the administrator is made.

In order to enter into pre-pack administration, the company must be insolvent and a licensed insolvency practitioner (IP) must be appointed to act as administrator. With a pre-pack, this appointment only takes place after the sale has been agreed.

The aim of a pre-pack is not to save the insolvent company itself, but to rescue viable elements of the business allowing trade to continue from a new company without the burden of the existing unmanageable debt.

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