What Is Pre-Pack Administration?
Many UK companies are struggling with the current climate, facing overwhelming debt and cash flow issues that can have serious implications on the business.
This is why many SMEs have turned to the Pre-Pack Administration procedure, which involves the sale of some of the assets of a business. For this you need an Insolvency Practitioner. The “buyer” of the assets can be anyone including current managers, or even competing companies in the industry.
The pre-pack procedure involves the company being put into administration. It is ideal when a company is facing the threat of insolvency and they want to rescue the business. Usually the bank and the directors of the business will have agreed a sale price before the administration is conducted.
A pre-pack administration allows businesses to free themselves from a desperate situation that can also protect staff. Business debt can be written off, and the business can then apply to trade under a different name.