PRE-PACK ADMINISTRATION

Sell your business and assets to get the best return and save jobs

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Company Insolvency Advice is well versed with assisting company directors across all industry sectors – Get the help and support you need by contacting us on either 0800 999 0666 or alternatively via email or schedule a meeting through our contact us page.

WHAT IS PRE-PACK ADMINISTRATION?

A Pre-Pack Administration is where the sale of the business and assets is agreed prior to the company entering into Administration and completed immediately once the Administration Order is made and Administrator’s are appointed.

A sale of the assets is agreed before the company goes into Administration and is completed as soon as it does. It is a “pre-packaged” event (hence the name) and provides the best return for creditors. A Pre-Pack Administration often saves jobs and allows contracts to be continued, giving ongoing future work to the new business with the least disruption.

“We are specialists in giving Pre-Pack Administration advice. Call us on 0800 999 0666 for a free & confidential discussion.”

HOW DOES PRE-PACK ADMINISTRATION WORK

The key to a successful Pre-Pack Administration is a better return to creditors and lenders. To begin with, you will have to discuss your company’s affairs with an insolvency specialist, to make sure that it is the right route to take.

When requested to go ahead, a valuation of the company’s assets by a specialist insolvency valuer is arranged. A price is then agreed and how the business is going to be sold.

Existing directors usually have knowledge of their business and will want to maintain their existing customers, so will be prepared to pay a little more for getting a “working model” without the debts.

This all usually takes between 7 to 28 days but the existing business can continue in the meantime. There is no set time-scale for a Pre-Pack Administration to complete. The urgency of the situation will dictate the time it takes.

As independent insolvency specialists, we can often help see where the problems have arisen in the past and give guidance to ensure that the same issues and errors do not arise, or are not made in the future

With a sale price agreed that will give the best return to creditors, an application is made to court to appoint an Insolvency Practitioner as Administrator.

Once the Administrator has been appointed, the sale is completed (usually the same day) and the business is moved to a new company.

If you think that finance for the new company may be difficult to obtain, Company Insolvency Advice can help you by discussing various situations and introducing you to an excellent range of finance providers. Call us now to discuss finance options on 0800 999 0666.

ADVANTAGES OF PRE-PACK ADMINISTRATION

 

  • The business continues through a new company free from debt.
  • Customers and contracts remain in place.
  • Employees jobs are saved.
  • Creditors get the highest possible return.
  • Administration process safeguards against unexpected legal action.
  • The process of change from the outside appear seamless.

HOW DOES A PRE-PACK ADMINISTRATION HELP YOU?

 

If your company has got financial problems and has to go down the route of formal insolvency proceedings, then a Pre-Pack Administration may be an alternative to be used rather than liquidation, when there will be a better realisation for creditors. This is the key to any administration process, but especially in a Pre-Pack Administration, as it is quite often the existing directors and management that buy the business / assets back.

There is nothing illegal in the directors of the old company buying the assets back through a new company, providing what is paid is more than it could otherwise have been sold for.

A Pre-Pack Administration can help save jobs as where the business continues in a new company. The employees will be transferred under the TUPE regulation and remain employed by the new company. This ready-made workforce is then in situ to help the new company continue and prosper.

SO WHAT SHOULD YOU DO NEXT

If you think that a Pre-Pack Administration could be the answer to your company’s problems, then contact Company Insolvency Advice today to discuss the company options available to you. We will need to hold consultations either face to face or remotely, to discuss all options and look at the structure of the current business.

There may be alternatives to Administration and with our experience we will present these options to you. We know it is your company and any major change is a big step. All our staff understand these difficult situations will help you moving forward.

CASE STUDIES

CASE STUDY 1

The company was a specialist construction, safety, maintenance operator and had got into financial problems as a result of the build-up of unpaid tax liabilities, caused by historic bad debts.

The company had obtained some excellent contracts that were operating but were unable to come to an arrangement with HMRC to satisfy the existing liabilities and control of goods action had been instigated over the company’s machinery it needed for operational purposes.

The company employed 17 people and was considering going into liquidation, however, its main customer said that it would be in breach of contract if that happened and no outstanding debtor money would be paid. It was, therefore, agreed that this main contract, along with the others, could be transferred to a new company and so, protecting the outstanding revenue due to the old company and allowing 17 employees to retain their jobs inside the new business.
The Pre-Pack Administration was approved and the company now continues to flourish, keeping up-to-date with all outstanding creditor payments.

CASE STUDY 2

The company operated two jeweller’s shops in the south of England and as a result of extensive construction works on the high street outside one of the shops, had seen trade reduce by over 60%.

The company had outstanding arrears to the landlord and the director had given a personal guarantee in respect of the company’s leases. In addition, the company owed various taxes that it was unable to pay.

A Pre-Pack Administration was approved, that meant the business could continue without the historic debt and the director of the former company was instrumental in purchasing the business and assets through a new company, for an amount that was higher than if the company had gone into liquidation and shut down.
Six employee jobs were saved and the company’s trading levels gradually rose back to a level that was sufficient for it to operate profitably through the new company, as a result of the Pre- Pack Administration.
“It only costs your time to call us and discuss your situation. It could be the most stress relieving call you make. Call 0800 999 0666 for free & confidential advice.”

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