A pre-pack sale is when the assets of an insolvent business have been substantially agreed for sale to a company which is either operated by the same directors, shareholders or a third party prior to the company entering either administration or liquidation.
One of the issues regarding a pre-pack sale is that this can complete prior to the creditors meeting and without notice to creditors. This can be an area of concern which creditors can complain about as they may believe that an underhanded deal has taken place.
This has led to significant controversy and has resulted in some very negative publicity, however if this procedure is completed correctly in accordance with all the guidance, there is no reason why a successful pre-pack sale cannot be achieved.
For further advice about pre-pack sales contact our insolvency expert Steven Wiseglass