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).

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 of their appointment. For more detail see: What is a pre-pack administration sale? and Practice Note: Buying a business from an insolvency practitioner.

Key characteristics

Pre-packs are likely to be negotiated and proceed in a short period of time.

A pre-pack administration tends to be quicker than a standard administration, and as a result can be less expensive and so provide a greater return to creditors

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