Pre-pack administration

An accelerated administration that requires expert handling.

Some pre-packaged administrations attract adverse publicity based on creditor unease that business owners have been unable to do what appears to be a cosy deal and restart a business debt free. Nevertheless pre-packs can be a useful tool to preserve value in a potentially viable business, help retain employment and provide a swift and better outcome for creditors.

More recently the regulations around pre-packs have been tightened requiring all insolvency practitioners to 'market' the business and assets or explain why not and encourage prospective connected party purchasers to carry out a viability review and to refer the deal to a new 'pre-pack pool' and share the outcomes with creditors, the influence being if those things are not done the deal is most likely a bad one. This is bound to lead to less pre-packs and more sales of business and assets out of liquidation with its attendant TUPE advantage.

When might a pre-pack be appropriate?

  • When time is of the essence to maintain business continuity.
  • When the core value of the business might dissipate otherwise.
  • If there is a danger of losing key staff or harming client relationships through uncertainty.

Pre-packs require careful handling by experts.

How can McTear Williams & Wood help?

Our senior team are fully conversant with the new regulations and in the right circumstances can execute the pre-pack process quickly and ethically whilst safeguarding the value of the business. We can also justify the process to creditors and other stakeholders.

Businesses for sale

Sometimes there is a need to sell the business and/or assets arising out of an administration and you can find out more about businesses for sale both from McTear Williams & Wood and other insolvency practitioners at the UK’s leading insolvent business and asset website www.IP-BID.com – this is the UK’s online market place for buyers and sellers of businesses in distress.

Marketing essentials in accordance with Statement of Insolvency Practice 16

Marketing a business is an important element in ensuring that the best available consideration is obtained for it in the interests of creditors and will be a key factor in providing reassurance to creditors.  Any marketing should conform to the following:

Broadcast - the business should be marketed as widely as possible proportionate to the nature and size of the business - the purpose of the marketing is to make the business's availability to the widest group of potential purchasers in the time available, using whatever media or other sources are likely to achieve this outcome.

Justify the marketing strategy - the statement to creditors should not simply be a list of what marketing has been undertaken.  It should explain the reasons underpinning the marketing and media strategy used.

Independence - where the business has been marketed by the company prior to the insolvency practitioner being instructed this should not be used as a justification in itself to avoid further marketing.  The administrator should be satisfied as to the adequacy and independence of the marketing undertaken.

Publicise rather than simply publish - marketing should have been undertaken for an appropriate length of time to satisfy the administrator that the best available outcome for creditors as a whole in all the circumstances has been achieved.  Creditors should be informed of the reason for the length of time settled upon.

Connectivity - include online communication alongside other media by default.  The internet offers one of the widest populations of any medium.  If the business is not marketed via the internet this should be justified.

Comply or explain - particularly with sales to connected parties where the level of interest is at its highest, the administrator needs to explain how the marketing strategy has achieved the best available outcome for creditors as a whole in all circumstances.

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