What is a pre-pack administration sale?

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • What is a pre-pack administration sale?
  • Stop press
  • A pre-pack administration sale—some basic principles
  • Who pays the costs of the pre-pack
  • The advantages of a pre-pack
  • The disadvantages of a pre-pack
  • Statement of Insolvency Practice (SIP) Guidelines
  • Historic reform of pre-pack administration sales

What is a pre-pack administration sale?

Stop press

On 8 October 2020, the Insolvency Service published the outcome of its review conducted into the impact of the voluntary industry measures introduced in November 2015, which aimed to improve the transparency of connected party pre-pack sales in administration. On 29 March 2021, the Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021, SI 2021/427 were made and come into force on 30 April 2021. The regulations mean an administrator is unable to dispose of property of a company to a person connected with the company within the first 8 weeks of the administration without either the approval of creditors or an independent written opinion. For further details, see Practice Note: Pre-pack administration—connected person sales. A revised SIP 16 has also been published to take into account the new regulations, see LNB News 07/04/2021 63 and Practice Note: Statement of Insolvency Practice (SIP) 16—pre-packaged sales in administration.

A pre-pack administration sale—some basic principles

A pre-pack is a sale of a company's business or assets, or both, which has been arranged in advance of a company entering administration. Once an administrator is appointed over the company they will quickly close the sale so that the company will not incur the costs of trading in administration. It is commonly used as a way of obtaining value from assets when the publicity of a formal

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