Pre-packs need to be more open and better understood
A number of recent, high profile cases have cast a critical light on a process used by most insolvency firms the ‘pre-pack’. In short, this is where a deal to sell the assets of a failing company is agreed prior to insolvency and completed immediately after the appointment of administrators or receivers.
Many of the negative perceptions of the pre-pack process stem from the fact that it can appear as if a business is fai.ling and the next day, it is being run as a new company with no liabilities, sometimes by the same individuals. Creditors and shareholders assume the insolvency practitioner (IP) and the directors have pushed through a quick deal which means they win and creditors lose out.
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