Pre-packs

Pre-packs

What is a pre-pack administration?

A pre-pack administration is a sale of a company's business or assets, or both, which has been negotiated and agreed in advance of a company entering administration. Once an administrator is appointed over the company, they will quickly close the sale (often within a few minutes).

Pre-packs are likely to be negotiated and proceed in a short period of time. Agreement is usually reached in confidence. The business is unlikely to have been advertised widely as there may be too much of a risk of key stakeholders disappearing as a result, ie key staff or suppliers.

Sales in pre-pack situations are generally subject to far less due diligence than a standard corporate sale. Warranties, indemnities or guarantees are rarely, if ever, given (as the office-holders will not have personal knowledge of matters in the way that directors might be expected to have) and assets will be sold as seen. Occasionally warranties may be requested on matters within the office-holders’ knowledge, for example relating to the validity

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