A pre-pack administration is where the sale of the business and assets of a Company are sold almost immediately after the appointment of the administrator. This is agreed prior to the administration.
They usually achieve a better outcome for creditors and it preserves the business as they allow for a seamless transfer of the business into the purchasers Company, preserving goodwill. Employees are transferred to the purchasing Company, reducing any redundancies that would have occurred had the Company ceased to trade.
If the pre-pack is to a connected party, the administrator will recommend they submit the proposed deal to The Pre-Pack Pool for an independent review.
The Pre-Pack Pool is an independent body of experienced business people who offer an opinion on the purchase of a business and/or its assets by connected parties to a Company where a pre-packaged sale is proposed. This provides some level of comfort should the pre-pack sale be scrutinised at a later date.