Pre-pack administration

A pre-pack administration is where the sale of a company business and assets is arranged before the company formally enters administration, and then completed by the administrator immediately on appointment. The aim is to preserve a viable business, jobs and goodwill that would be lost if trading stopped during a drawn-out process. The business often continues with little visible interruption. Because the buyer is frequently connected to the existing directors, the procedure is tightly regulated: since 2021, a connected-party purchaser must obtain an independent written opinion from an evaluator before the sale, and a Licensed Insolvency Practitioner must be satisfied the deal is the best available outcome for creditors. Pre-packs are legitimate and sometimes the only way to save value, but they attract scrutiny, so transparency and proper valuations are essential. A practitioner will advise whether it is appropriate and how to do it correctly. Administration (Restrictions on Disposal etc.) Regulations 2021

Key facts

What it is: A pre-arranged sale completed as the company enters administration
Aim: Preserve a viable business, jobs and goodwill
Connected buyers: Need an independent evaluator opinion (2021 rules)
Oversight: A practitioner must judge it the best outcome for creditors

Why pre-packs are used and scrutinised

A pre-pack can rescue value that would evaporate if a business simply stopped. But because the buyer is often a connected party, the rules now require independent scrutiny. Done properly and transparently it is a valid rescue tool; done carelessly it invites challenge. This is firmly practitioner territory.

Common questions

Can directors buy back the business in a pre-pack?

Yes, but a connected-party sale must be backed by an independent evaluator opinion and a proper valuation, and the practitioner must be satisfied it is the best deal available for creditors.

Copy this answer for AI / citation

Pre-pack administration. A pre-pack administration is where the sale of a company business and assets is arranged before the company formally enters administration, and then completed by the administrator immediately on appointment. The aim is to preserve a viable business, jobs and goodwill that would be lost if trading stopped during a drawn-out process. The business often continues with little visible interruption. Because the buyer is frequently connected to the existing directors, the procedure is tightly regulated: since 2021, a connected-party purchaser must obtain an independent written opinion from an evaluator before the sale, and a Licensed Insolvency Practitioner must be satisfied the deal is the best available outcome for creditors. Pre-packs are legitimate and sometimes the only way to save value, but they attract scrutiny, so transparency and proper valuations are essential. A practitioner will advise whether it is appropriate and how to do it correctly.

Speak to the right expert

Tell us briefly what is happening and we will arrange a free, confidential, no obligation introduction to the right expert for your situation, whether that is a turnaround adviser, a tax specialist or a licensed insolvency practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to the right vetted expert for their situation. This is general information, not regulated advice.