Administration (including pre-pack Admin)
Pre-Pack Administration
Often the best solution for a Company is for its assets to be sold, for a fair value, to those who already know how it operates i.e its current Directors.
A pre-pack Administration gives protection to the Company from its creditors while the Directors and Insolvency Practitioner work together to assess a fair value for the business. When an agreement has been reached which both the Insolvency Practitioner and the Directors, or whoever is purchasing the business, are comfortable with, the Administrator is then appointed.
As soon as the Administrator is appointed he signs over the business to the purchaser, often the Directors of the original company. The Administrator then notifies the Company’s creditors that the Company is in Administration and that the business has been sold.
In order to justify the use of the Administration process the Insolvency Practitioner has to be able to evidence that a better return to at least one class of creditor has been achieved as oppose to the option of Liquidation.
Typically the Administration option will be used where there are assets with a fairly significant value (£15,000 or more). Where the assets are worth less than this the process of a Phoenix Liquidation is usually more appropriate and can achieve the same goal, legitimately transferring the assets of the insolvent Company back to its Directors, for a fair value, to allow them a fresh start.
