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ARTICLE · 14 FEBRUARY 2011

Pre-Pack Sales in Administrations - Best Value for Creditors?

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A "pre-packaged sale", or "pre-pack", is an arrangement under which the sale of all or part of a company's business or assets is negotiated with a purchaser prior to the appointment of an administrator, and effected shortly (perhaps immediately) after appointment.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Patrick Gilmour
Patrick Gilmour

Originally published 6 Apr 2009

A "pre-packaged sale", or "pre-pack", is an arrangement under which the sale of all or part of a company's business or assets is negotiated with a purchaser prior to the appointment of an administrator, and effected shortly (perhaps immediately) after appointment. The administrator effects the sale without the business being offered to the open market. Administration has numerous benefits for the business in question, primarily the fact that creditors' rights are confined to the selling company and do not continue against the business transferred, the retention of employees and the continuation of the business.

Recent high profile pre-packs have involved retailer USC and coffee seller Whittard. In the case of USC the West Coast Capital Group immediately repurchased the retailer when it went into administration. Media attention has focused on the fact that the purchaser in a pre-pack will sometimes be formed of previous owners who

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