Pre-Pack Administration

Pre-Pack Administration

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Pre-Pack Administration.

What then Is One?

Pre-pack Administration is an Insolvency process. It allows the agreed purchase using a bids process by potential buyers to purchase company assets before entering Administration.

A Licensed Insolvency Practitioner (IP) is then required to act as Administrator of the company. The appointment of an Administrator then takes place at a point of proceedings, so to, therefore, expedite a sale.

Why Then before Appointment?

By doing this then before there appointment, it, therefore, protection of employment(transfer of undertakings, jobs), preserves asset values and sustains business momentum.

Assets will then transfer to a then newly formed company, and therefore continuity of trade assured.

Pre Pack Administration Process.

For a prepack process to, therefore, commence, however. No creditors meeting called until the sale of assets completed.

The potential insolvent company is now starting entry into an insolvency process. It will have the assets valued and then is required to prepare a statement of affairs of the company. This details company assets and company debts. The business requires valuing. It is therefore crucial, to ensure you then cross the “T’s” and dot the “I’s” when carrying out a Pre-Pack. Creditors will, however, take careful note of what is then happening. Are assets, therefore, transferred at fair value? Therefore, ensure you seek early advice from the to be appointed Administrator. Voiding accusations of wrongful trading.

Please note, a pre-pack administration is, therefore, for the sale of ASSETS and not then the COMPANY.

For further help on a Pre-Pack contact HBG Advisory and click on MEET THE TEAM for our business recovery and business rescue experts.

Suitable for pre-pack Administration?

  • Subject then to stringent legislation. The officeholder is, therefore, required to demonstrate that the process offers the best outcome for creditors.

Why then a pre-pack administration?

  • Preservation of asset values;
  • Adverse press then subdued;
  • Then enables business continuity;
  • A better outcome for Creditors;
  • Job protection.

TUPE: Pre-Pack administration

The Transfer of Undertakings (Transfer Undertakings Protection of Employment) regulations, or TUPE, therefore, protects the contracts of employees when they move from one company to a new one.

TUPE is strictly adhered to and is then the responsibility of company directors, so they, therefore, need to be aware.

Jobs usually are therefore preserved with a pre-pack. Redundancies are sometimes then necessary, and the way you administer these is, therefore, crucial. You must comply with TUPE regulations to, therefore, avoid potential claims of unfair dismissal.

Under SIP 16, insolvency practitioners are required to follow stringent rules to ensure transparency in the transaction process under pre-pack.

Does the pre-pack administration suspend or interrupt business?


Pre-pack administration is a legally complex process. However, though little disruption occurs to the progress of the insolvent and to be the new company. A  pre-pack administration, therefore, offers a seamless business transfer.

This is because even assets such as contracts in work – for example, contracts for certain services that were only 50% complete at the time of the prior company’s insolvency – can be purchased and transferred to the new company.

Existing Directors

Dependant on who purchases the assets and other factors will determine if directors from the old company transfer to the new. This is due to the fact that the assets are sold and not the business as a whole.

Preferential Creditors

Preferential creditors, such as employees for arrears of pay and holiday pay, HMRC (from December 2020), possibly will receive a full dividend in nearly all administrations. In a pre-pack administration, employees that remain are transferred to the purchaser,  thus little if no preferential claims are made.

Unsecured Creditors

Unsecured creditors sometimes receive a dividend under the “prescribed part” though no dividend it not unusual.

Order to repay creditors in administration (When Insolvent)

  1. Bank holding a fixed charge
  2. Appointed administrator’s fees
  3. preferential creditors
  4. Any secured creditors (floating charge)
  5. Lastly unsecured creditors

Can a Pre Pack Sale be Challenged


If creditors of the company have concerns that the pre-pack dale return was low. Then creditors may seek legal action. Courts have demonstrated that if they feel deals have been done which creditors have lost out then they will intercede.

Therefore, Licensed insolvency practitioners need to take great care and demonstrate transparency when dealing with a pre-pack administration.

HBG Advisory may then assist on remaining compliant and avoid fines for failing to comply.

Looking, therefore, to remove stress having been through a Pre- Pack Administration, view Flyingeese.

Pre-Pack Administration
Pre-Pack Administration
Pre-Pack Administration
Pre-Pack Administration
Immediately stops all creditor legal action
Jobs can be saved in Administration
The business doesn't have to cease trading

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