Discover how pre-packaged administration offers a lifeline for struggling companies, enabling business rescue while preserving jobs, customer relationships, and enterprise value.
Tenable Business Support Team
Business Recovery Specialists
Pre-pack administration (often called a "phoenix transaction" or "pre-packaged CVA") is a formal insolvency procedure where a company's assets are sold immediately upon entering administration - often to the existing directors or a connected party. The sale is negotiated and agreed before the administrator is appointed, allowing for rapid business rescue and continuity.
Unlike traditional administration where assets are marketed over weeks or months, a pre-pack enables an almost immediate transfer of the viable business elements to a new entity. This speed preserves customer confidence, employee morale, and business value that would otherwise be lost through prolonged uncertainty.
Pre-pack administration allows companies to emerge from insolvency within hours rather than months, protecting jobs and maintaining trading relationships that would be destroyed by a lengthy liquidation process.
Your business model works but is burdened by historic debts, onerous contracts, or unsustainable liabilities.
Jobs can be saved by transferring employees to the new entity, avoiding the mass redundancies of traditional liquidation.
Speed is essential - delayed action would result in loss of key customers, contracts, or market position.
HMRC, landlords, or other creditors are threatening winding-up petitions that would destroy the business.
Meet with a licensed insolvency practitioner to assess viability, explore alternatives, and determine if pre-pack is appropriate.
Independent valuation of assets. The business must be marketed to test the market and demonstrate best value, satisfying SIP 16 requirements.
Agree purchase price and terms with the prospective buyer (often existing directors or management). Documentation prepared for immediate completion.
Administrator appointed, immediately completes the pre-negotiated sale. Business transfers to new company - usually same day or within 24 hours.
Newco operates debt-free with transferred assets, employees, and contracts. Old company wound up by administrator with distributions to creditors.
From initial consultation to completion: 2-4 weeks. The actual administration and sale typically occur within 24-48 hours once preparations are complete.
Business continuity maintained with minimal disruption. Customers and suppliers often unaware of the restructuring.
Employees transfer to the new entity under TUPE regulations, preserving employment and expertise.
Trading businesses typically achieve higher values than distressed forced sales, maximizing creditor recoveries.
New company starts without historic liabilities, onerous leases, or unprofitable contracts.
Properly executed pre-packs protect directors from accusations of wrongful or fraudulent trading.
Statement of Insolvency Practice 16 mandates transparency, independent valuations, and evidence of proper marketing.
Sales to directors or connected parties face enhanced scrutiny to ensure creditors receive fair value.
The purchaser must have funds available for the acquisition price plus working capital for the new business.
If the core business isn't viable or there are no interested purchasers, alternative procedures may be more appropriate.
Pre-pack administration must be arranged before insolvency becomes unavoidable. Directors who delay until creditors take action may find they've lost the opportunity for this strategic option.
Acting early provides more options and better outcomes for all stakeholders.
Understanding pre-pack administration, how it works, benefits, drawbacks, and whether it's the right option for your business.
Could pre-pack save your business?
Explore Pre-Pack OptionsUnderstanding pre-pack administration processes.