Home > Uncategorized > Pre pack administration. New pressure on insolvency practitioners

Pre pack administration. New pressure on insolvency practitioners

From the 1st November the following guidelines for IPs will be implemented. This will be monitored through a structure which I will come to on a later post but the key question for me is what penalties will be in place if these structures are not adhered to? It could also be argued there is an element of “how long is a piece of string” about a number of the points

But let’s look at the positive side and acknowledge that this is welcome and overdue progress. Most credit managers will have experienced an unpleasant experience with clients that have taken the pre pack route and certainly the behaviour of some in the insolvency industry has often been awful. In my experience I would cite one of the very largest and supposedly reputable accountancy firms under that banner

They must keep records of the reasoning behind the pre-pack sale and also all other alternatives considered


Any valuations of sale assets should be conducted by appropriate independent valuers and/or advisors with adequate professional indemnity insurance. If the administrator relies on another type of valuation, he has to disclose this together with the reason and why he was satisfied with the valuation


A requirement to market the business/asses is emphasised, to ensure that consideration is maximized for the benefit of the company’s creditors. Marketing is a key factor in reassuring creditors and the SIP states that in marketing the IP should:
“broadcast” (market as widely as possible)
be capable of “justifying the marketing strategy”
show “independence”
“publicise rather than publish” (market for an appropriate length of time), and
use “connectivity” (use online communications)

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