WHAT IS A PRE-PACK?
At Swaab, we have seen an increase in "pre-packaged
insolvencies" by distressed companies. "Pre-packs",
as they are known, are arrangements where the sale of all or part
of a company's business and/ or assets is negotiated with a
purchaser (often one associated with the company or its management)
prior to the appointment of an administrator, and the administrator
effects, or authorises the sale immediately on, or shortly after,
his appointment. Where the sale takes place prior to the
appointment of the administrator, it is often done in consultation
with the administrator-elect.
BENEFITS
Pre-pack sales are becoming more popular because they avoid the
costs and risks of continuing to trade during the administration,
as well as the costs of the administrator marketing the business,
finding a willing buyer, and negotiating the sale. Pre-pack sales
preserve the goodwill of the business and hence maximise the value
of the business and the assets.
