Government to Review ‘Pre-Pack’ Administration

A pre-packaged administration (pre-pack) is one where the sale of an insolvent business and its assets is arranged prior to the onset of formal insolvency and takes place immediately, or very soon, after the administrator’s appointment.

During 2011 (the latest year for which published figures are available), the Insolvency Service was notified of 723 pre-packs by insolvency practitioners. This represents approximately 25 per cent of all administrations during 2011, and is broadly in line with the proportion of pre-packs undertaken in previous years.

Faced with calls for greater transparency, higher levels of compliance and a stricter regime of sanctions to prevent abuse of the process, the Government has announced an independent review into pre-pack administration. A timescale for this will be announced shortly.