HomeFWJ takeawayTakeawayCompany rescueBusiness recovery and rescueWhat is a pre-pack administration?

We are often asked, “what does going into administration mean”?

Unlike liquidation, administration whether commenced by an administration order or an out of court process, is a “rescue” process rather than a “burial” process for companies in financial difficulties. Where a company is in financial difficulty and it is anticipated to place the company into a formal insolvency process such as administration, then in order to maintain continuity of trading and the status quo of business with minimal disruption, discussions are entered into between the proposed administrator and an interested purchaser prior to administration to agree a sale and purchase of the business and assets from the company to a purchaser (often managed by the existing management) immediately following the appointment of the administrators

Pre-pack publicity – make the right choice

Whilst pre-pack administrations have received some adverse press coverage for being open to abuse by unscrupulous company directors, they can be vital in rescuing a business, safeguarding employees and improving the position of suppliers and other creditors because of the minimal disruption and adverse publicity of insolvency.

Administrators do not have the same advantage of testing the market for the best possible price for the business and are required to provide a report to creditors (known as a SIP16 report) setting out their rationale for the pre-pack sale as they are ultimately responsible to the general body of all creditors.

For administration order advice, please contact our expert administration order team at Francis Wilks & Jones. We are here to help.

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