What is a Pre Pack?

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What is a Pre Pack?

Now unfortunately, this is a term that is often thrown around in the media to describe any form of Insolvency process. In actual fact, a Pre Pack is a specific set of circumstances that gives rise to the sale of a business immediately upon the appointment of the Administrator. With all the negotiations having taken place prior to that appointment. It’s a controversial process because it’s not often seen that the business is being marketed for sale before the administrator’s appointment. So there has to be good reasons for doing things this way.

The main benefits of a Pre Pack are that it protects the integral value of the business because it isn’t widely marketed, and known that it’s up for sale. But at the same time, the right potential purchasers have been approached on a discreet basis.

Provided that the price is right, a Pre Pack can be a great tool for rescuing businesses, because it means that the trading is uninterrupted, employees carry on being employed, and the company’s assets are realized for the maximum value which benefits the creditors. But it is controversial, and it does have to be dealt with correctly and transparency is the main thing that concerns people. So therefore, making sure that creditors are aware even after the event of what has happened and why it’s happened is very important to protect the integrity of the sale and the process of Administration.

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