[email protected]
0161 907 4044
Logo for Clarke Bell Licensed Insolvency Practitioners featuring a stylized "CB" monogram in teal and navy blue, followed by the company name in gray text.

Pre-Pack Administration

Pre-Pack Administration is a formal insolvency process that allows the business and assets of an insolvent company to be sold quickly, enabling trading to continue under new ownership.

Get Expert Advice Now
Not sure whether Pre Pack Administration is the right option?
A teal, wavy arrow pointing toward the upper right on a transparent checkered background.
A 4.5 star Google reviews
Preserve
Business Value
Protect Jobs
Where Possible
Free
Confidential Advice

What is Pre-Pack Administration?

Pre-Pack Administration is an insolvency procedure where the sale of a company’s business and assets is arranged before the company formally enters administration.

Once a licensed Insolvency Practitioner is appointed as administrator, the sale completes quickly allowing the business to continue operating with minimal disruption.

The aim of a pre-pack is not to rescue the insolvent company itself, but to preserve viable parts of the business. The business can continue under new ownership while historic debts remain with the old company.

0161 907 4044

John Bell

Senior Partner | Licensed Insolvency Practitioner

A banner featuring the logos for ICAEW Licensed Insolvency Practitioners (UK), R3 Association of Business Recovery Professionals, and the Insolvency Practitioners Association.

When is Pre-Pack Administration used?

Pre-Pack Administration is typically used when a company is insolvent but the underlying business remains viable.

It may be appropriate where:

  • The company is experiencing serious cashflow problems and cannot pay creditors
  • There is a buyer for the business, such as Directors, employees, or a third party
  • The business would lose value if trading stopped
  • Preserving jobs, contracts, or goodwill is important.

In many cases the purchaser is a new company formed by the existing Directors, allowing the business to continue operating without the burden of historic debt.

As featured on:
A collage featuring the logos of three publications: ContractorUK at the top, The Guardian in the center, and the Financial Times at the bottom.

Think Pre-Pack Administration may be right for your business?

We can help you assess whether the business remains viable and whether a Pre-Pack Administration is the most appropriate route.

Get Expert Advice Now

Pre-Pack Administration process

A Pre-Pack Administration is carefully prepared before the company formally enters administration. The sale of the business is negotiated in advance and completed immediately upon the appointment of the administrator.

The typical process involves:

1

Step 1: Directors seek professional advice

Directors contact a licensed Insolvency Practitioner to review the company’s financial position and discuss the available restructuring or insolvency options. This initial discussion helps determine whether a Pre-Pack Administration could be appropriate.

2

Step 2: Financial review and recommendation

The Insolvency Practitioner carries out a detailed review of the company’s operations, assets, liabilities, and prospects. Based on this assessment, they advise whether a Pre-Pack Administration would achieve the best outcome for creditors compared with other insolvency procedures.

3

Step 3: Independent asset valuation

Professional valuers or specialist agents assess the value of the company’s assets and business operations. These valuations help ensure the proposed sale reflects fair market value and meets regulatory requirements.

4

Step 4: Marketing the business

The business may be discreetly marketed to identify potential buyers. This can include third-party purchasers or a new company formed by the existing Directors, provided the transaction complies with insolvency regulations.

5

Step 5: Sale terms agreed

Interested buyers submit offers for the business and assets. The preferred buyer is selected based on the best outcome for creditors, and the sale price and terms are formally agreed with legal documentation prepared.

6

Step 6: Administrator appointed

The Insolvency Practitioner is formally appointed as the company’s administrator. At this point, they take control of the company’s affairs and are responsible for completing the administration process.

7

Step 7: Immediate completion of the sale

Once appointed, the administrator completes the pre-arranged sale of the business and assets to the buyer. Because the transaction has already been negotiated, the sale can take place immediately after the administration begins.

8

Step 8: Creditors informed and proceeds distributed

Creditors are notified of the administration and the completed sale. The funds generated by the transaction are then distributed to creditors in accordance with the statutory order of priority.

Need help understanding how Pre-Pack Administration works?

Speak to a licensed insolvency practitioner for clear advice on the process, likely timescales, and whether it is suitable for your company.

Get Expert Advice Now

Advantages of Pre-Pack Administration

Pre-Pack Administration can offer several advantages compared with liquidation, particularly where the underlying business remains viable.

Business continuity:

The business can continue operating with minimal disruption after the sale. Because the transaction completes quickly once the administrator is appointed, trading can continue without the uncertainty that often accompanies a lengthy insolvency process.

Preserving value:

Selling the business quickly helps protect the value of assets, contracts, and goodwill. A fast sale reduces the risk of customers, suppliers, or employees losing confidence in the business.

Saving jobs:

Employees may transfer to the new company under TUPE regulations. This can allow many staff to remain employed and ensures that the skills and experience within the business are retained.

Better returns for creditors:

Selling the business as a going concern can often produce higher returns than selling assets after liquidation. Preserving the business’s value may increase the funds available to repay creditors.

Pre-Pack Administration vs Liquidation

When a company becomes insolvent, Directors must consider the formal options available for dealing with the company’s debts. The most appropriate solution will depend on the company’s financial position, the level of creditor pressure, and whether the underlying business remains viable.

A Pre-Pack Administration may be appropriate where the underlying business still has value and can continue under new ownership through a sale completed immediately after administration begins.

A Company Voluntary Arrangement (CVA) may be appropriate where the business is still viable and can repay debts over time through an agreed repayment plan while continuing to trade.

A Creditors’ Voluntary Liquidation (CVL) is usually the right option where the company has no realistic future and needs to be closed in a formal, compliant way.

Feature Administration CVA CVL
Purpose Rescue or restructure Repay debt over time Close company
Suitable for insolvent firms Yes Yes Yes
Stops creditor action Yes Yes Yes
Directors stay in control No Yes (under supervision) No
Typically within 12 months Typical duration 3 to 5 years 6 to 12 months

If Pre-Pack Administration is not the most appropriate solution, Clarke Bell will recommend the best alternative based on your company’s situation.

Not Sure What The Right Option Is For Your Company?

You don’t need to figure everything out on your own.

Take our quick 60-second company health check to understand your situation and identify available options.

  • Find out if liquidation may be the right option
  • See possible alternatives to liquidation
  • Understand the next steps for your company
  • Get clearer insight into your financial position.

Check your company’s options. Prefer to speak with someone instead?

A person's hand holding a smartphone that displays a "60 Second Company Health Check" survey by Clarke Bell, asking if the company can pay its bills and debts.

Regulation of Pre-Pack Administration

Pre-Pack Administrations are subject to strict regulation to ensure transparency and fairness.

Administrators must follow Statement of Insolvency Practice 16 (SIP 16), which requires detailed disclosure explaining how the sale was arranged and why the pre-pack was considered the best outcome for creditors.

Where the buyer is connected to the original company, such as the existing Directors, the purchaser may seek an independent opinion from the Pre-Pack Pool. This independent body reviews the proposed sale and provides an opinion on whether the transaction appears reasonable.

These safeguards help ensure that Pre-Pack Administrations are conducted properly and that creditors receive the best possible outcome.

Why choose Clarke Bell for Pre-Pack Administration?

When a company enters administration, a licensed Insolvency Practitioner must be appointed to manage the process and act in the best interests of creditors.

Clarke Bell has been helping company Directors deal with insolvency and financial distress for over 30 years. Our experienced team provides clear advice and practical solutions for businesses considering administration, restructuring, or liquidation.

30+ years of insolvency experience

Licensed Insolvency Practitioners Regulated by the ICAEW

Nationwide service Remote consultations available

Speak to an Insolvency Practitioner

Get clear advice on whether Pre-Pack Administration is the right option, how the process works, and what the next steps could look like for your business.

“Excellent service. The whole process from start to finish was handled very professionally and efficiently by our account manager. We were continuously and proactively updated on progress. The timescales were exactly as advised. Clarke Bell made a difficult situation as easy as possible, and I could not recommend them more highly.” – Leigh Veerman

Speak to a CVA Expert
A banner featuring the logos for ICAEW Licensed Insolvency Practitioners (UK), R3 Association of Business Recovery Professionals, and the Insolvency Practitioners Association.

Toyah Poole

Licensed Insolvency Practitioner

FAQs about Pre-Pack Administration

Pre-Pack Administration is usually completed very quickly once the administrator is appointed. The preparation stage may take several weeks as valuations are conducted and a buyer is identified. However, the sale of the business normally completes immediately after the company enters administration.

A Pre-Pack Administration involves selling the business and assets of an insolvent company to a new owner, often allowing the business to continue trading without its historic debts. A Company Voluntary Arrangement (CVA) allows the existing company to continue trading while repaying creditors through an agreed repayment plan.

Yes, Directors can buy their business back through a new company during a Pre-Pack Administration. This is common, provided the sale is independently valued and the administrator confirms it delivers the best outcome for creditors.

No. Liquidation permanently closes a company and its assets are sold to repay creditors. Pre-Pack Administration allows the viable parts of a business to be sold quickly so trading can continue under new ownership.

Creditors do not approve the sale before it takes place. However, the administrator must show that the pre-pack sale achieved the best possible outcome for creditors and must disclose the transaction details after completion.

Yes. Pre-Pack Administration is a legal insolvency procedure in the UK. It is regulated under insolvency law and governed by Statement of Insolvency Practice 16 (SIP 16), which requires transparency and proper disclosure to creditors.

Further reading on Pre-Pack Administration

Get Expert Advice Now

Preserve business value with expert Pre-Pack Administration

If your company is facing serious financial difficulties but the underlying business remains viable, Pre-Pack Administration may allow the business to continue while historic debts remain with the old company.

Clarke Bell’s licensed insolvency practitioners can review your situation, explain the available options, and help you decide on the most appropriate next step.

Call us

Speak directly with a practitioner

Give us a call

Email us

Get a response within 24 hours

Send an email

60 Second Health Check

Understand your situation and identify available options

Get Expert Advice Now