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Pre Pack Administration
The Pre Pack Administration website is concerned with providing information upon a key area of business rescue for Focus Insolvency Group. We are a fully licensed insolvency practice with many years business experience dealing with a wide range of complex business and company rescue solutions including the latest insolvency developments - the innovative Pre pack legislation.
The insolvency practice helps businesses across the whole of the UK through our teams of accountants; Licensed Insolvency Practitioners and specialist business debt counsellors who are able to provide immediate, impartial and confidential pre pack advice to all business sectors. We combine more than 30 years experience in providing access to a wide range of insolvency restructure solutions such as pre pack administration and liquidation options to all company directors. We have specific industry knowledge across many industry sectors to help you find the right solution for your business.
The Prepack Concept
A pre pack administration is one of the most recent innovations in UK insolvency. The pre pack concept was developed to help try to maximise the value of a business sale when continuity is necessary for clients and to also try to ensure that a degree of "goodwill" is retained as a business asset.
Pre Pack Administration Advantages:
Existing directors - providing they can find the necessary funding to buy back the business assets - retain a degree of control during the pre pack administration process.
The old business "phoenixes" into the new company to provide customers with continuity of operation and maintenance of business value.
Key employees have certainty of employment continuity.
Key suppliers may be retained for the benefit of the business. Although certain agreements would have to be renegotiated as the original company will cease to be legally liable upon liquidation.
The actual pre pack transaction is very quick because the due diligence is carried out prior to the marketplace becoming aware of business problems.
The new company does not carry the burden of significant debts or property or lease obligations it can no longer afford and which were dragging the old business under.
Pre Pack Administration Process
1. Insolvent Business
The directors of the failing business must recognise that the business is insolvent and call in an insolvency practitioner to provide advice on all the options available.
2. Insolvency Practitioner
In the event that a pre pack administration is financially, legally and ethically the best way forward then the insolvency practitioner, upon appointment, will commence marketing of the business in a way which tries not to compromise the future viability of the new trading company.
3. Existing Directors
If the current directors wish to purchase the old business then they will need to set up a new company vehicle to allow the administrator to sell the pre pack business into. The old directors will also need to have all of their funding in place to purchase the company.
4. The Old Company
The old company should then formally enter into administration and an insolvency practitioner appointed to oversee all of the pre pack arrangements.
All formal independent business valuations are now undertaken and recorded.
5. The Sale
A sale agreement will be drawn up by the administrator and, upon signature; the company assets will be sold to the new purchaser and transferred into the new company vehicle.
6. Meeting of Creditors
The administrator will then call a meeting of creditors to explain the sale of the business and provide justification as to why the pre pack administration was the best insolvency option.
The old company is then usually liquidated and the assets (mainly sale proceeds from the pre pack) will be distributed according to the prescribed legal terms.