Is your business facing some serious financial problems from trade creditors? A lot of companies that are still viable but are threatened of being shut down due to huge problems and legal threats are in need of ways and means to be saved and still be able to continue to do business. An effective and quite popular method that is being used today by financially challenged companies is the pre pack liquidation and  pre pack administration sale. A pre-packaged administration sale is a scheme where a company sells all or a part of its assets or business in order to save the company from closing down. The negotiation for the sale takes place before an Insolvency Practitioner is appointed by the court as the company’s Administrator.

In a pre-packaged administration sale, a company or a part of its assets or business may be sold to a third party, to a “newcom” or to its existing directors. A pre-pack administration sale is commonly used by companies that are facing serious threats from its trade creditors, landlords, HMRC for PAYE and VAT, or banks. This popular process will not only save the company from shutting down but will also benefit its employees and creditors. When the company is sold, jobs will be saved thereby assuring workers of still having their jobs. Pre-packs will also improve returns for the company’s creditors.

As the administrator of the company, the Insolvency Practitioner is the one who markets the company. He may send sales memos to potential buyers or advertise it on local or national newspapers or on his website. He effects the sale of the company on his appointment. As the administrator of the company, the IP must provide information to the company’s creditors regarding its sale. The creditors must be notified of the name of the company’s buyer and the amount paid for it.