How Can Struggling Retailers Benefit From A Pre-Pack Administration?

October 10, 2019 / FAQs

Many UK retailers are struggling in the current economic climate, overwhelmed with debt and cash flow issues that can be difficult to overcome.

For some retailers, the Pre-Pack Administration procedure can offer some relief and resolve the financial issues. Wondering if it’s the right option for you? Here’s how struggling retailers can benefit from pre-pack administration.

What is a Pre-Pack Administration?

Pre-Pack Administration is a process that involves the sale of a company’s assets. An Insolvency Practitioner is required to oversee and carry out the process. The ‘buyer’ of the assets can be anyone from current managers to competing companies in the industry.

Usually, the bank and directors will agree a sale price before the administration begins.

When is Pre-Pack Administration suitable?

The Pre-Pack Administration procedure is most suitable when a company is facing the threat of insolvency and directors want to rescue the business.

Pre-Pack Administration is well-suited to the retail industry, in large part due to its ability to protect employees’ jobs and avoid redundancies.

How can struggling retailers benefit from a Pre-Pack Administration?

Business continuity – When a company is sold through Pre-Pack Administration, its operations can continue with minimal disruption.

Protected brand image – Pre-Pack Administration can help companies avoid the negative publicity often associated with company insolvency. If a director is keen to protect the company’s brand and reputation, pre-pack administration can facilitate this by saving jobs, improving cash flow and keeping options open for the future.

Reduced administration costs – Pre-Pack Administration is usually quite a fast process and can also be more affordable than other options available to liquidating business.

How do I begin the pre-pack process?

If you’d like to start the Pre-Pack Administration process, you’ll need to seek professional advice to ensure it’s the most suitable option for you. A team of insolvency practitioners will also guide you through the process and make sure you abide by legal criteria.

To find out how Clarke Bell can help you, please get in touch with our team.