A pre-pack is when an insolvent company’s business (and/or assets) are sold prior to the company going into an administration. A pre pack is all negotiated and agreed before a Licensed Insolvency Practitioner (IP) is appointed, and is then facilitated once the IP has been formally place in office.
Under the terms of a prepack the core business is usually sold with little or no open marketing. The creditors and customers are not usually of the pre-pack until it all ready to execute.
There are clear benefits to the pre pack process in the current economic climate such as:
A prepack enable a company business to continue to operate, whilst getting rid of their debilitating debts
In the current downturn with fewer buyers around, a pre-pack is a good option for many distressed businesses
The prepack process saves staff their jobs
Secured creditors get a satisfactory outcome
The goodwill of the business is saved.
The process is relatively quick and easy to arrange
The prepack process is often so efficient that often people have no idea that a prepack has taken place
Previous owners can buy back the businesses free of many liabilities
For an Insolvency Practitioner Pre-packs can be an invaluable tool for keeping a business trading and saving jobs
There are many advantages of a Pre-Pack Administration. Here we have listed most of of them. Please call our advice team today to get access to expert help.