When I’m asked to advise on a pre-pack administration, I treat it as two things at once.
First, it’s a rescue transaction on a very tight clock… sometimes a matter of days. Second, it’s a process that must stand up to creditor scrutiny afterwards, because a pre-pack is always judged in hindsight. That means I’m thinking about outcomes, evidence, and transparency from the first conversation.
A pre-pack is, in simple terms, a sale negotiated before my formal appointment as administrator and completed immediately on, or shortly after, that appointment. The operational speed is the feature. The compliance burden is the price of using it.
Here’s how I approach it – from my seat as the Insolvency Practitioner.
1) My first question: is a pre-pack appropriate at all?
I start by understanding the problem the directors are trying to solve.
A pre-pack is usually only justified where time is genuinely against us – the cash runway is too short to trade, or the value sits in goodwill, contracts, licences, or staff that won’t survive a prolonged formal process.
Crucially, I also document the alternatives that have been considered (and why they don’t deliver a better result). That typically includes a trading administration, CVL, CVA, refinancing, or other restructuring options.
If we can’t articulate ‘why a pre-pack, why now, and why this route is better for creditors’, we’re already on the back foot.
2) Engagement and independence: I ring-fence who I act for
Early on, I’m careful about roles and duties.
I can advise the company on the options and the process, but I need to be clear that I’m advising the company, not the directors personally. If the directors intend to buy the business (a connected party scenario), I will normally expect them to take independent legal advice.
I also ensure board authority is properly recorded – typically a resolution to explore administration, appoint advisers, approve a marketing strategy, and authorise negotiation of a conditional sale agreement.
That paperwork matters. Not because I’m ‘box-ticking’, but because it shows decision-making was structured rather than panicked.
3) Evidence is everything: valuation, marketing, and the decision record
Pre-packs are often criticised for lack of openness. My job is to make sure the file can demonstrate the opposite.
That means:
Independent valuations
I obtain independent professional valuations of the assets being sold – including intangible value and goodwill where relevant.
Proportionate marketing
I put in place marketing that is proportionate to the business, sector and urgency. Where marketing is necessarily limited (for example, because delay would collapse the business), I need a documented rationale, and I need a clear marketing log of what we did, who we approached, and the response.
A decision record
I prepare a clear record explaining why a pre-pack is expected to achieve a better result for creditors than the alternatives – because that is the centre of the justification later.
This is not just good practice. It’s the spine of compliant SIP 16 disclosure.
4) Connected party sales: I plan for the Evaluator report early
If the proposed buyer is connected (directors, shareholders, associates), I immediately switch into ‘Regulations mode’.
The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 require the connected purchaser to obtain a written ‘qualifying report’ from an independent Evaluator on the proposed terms before completion.
Two important realities here:
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This takes time, even when everyone is trying to move quickly.
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If the evaluator’s opinion is negative, I can, in theory, still proceed – but I must be able to justify why I’ve proceeded against that opinion, and that justification needs to be credible.
So I build it into the timetable early, rather than discovering on the eve of appointment that we can’t complete because the Evaluator doesn’t like what we propose.
5) Stakeholder management: I deal with the people who can stop the deal
A pre-pack is not just a legal process; it’s a stakeholder exercise.
I focus early on:
Secured creditors
If there is a Qualifying Floating Charge Holder (QFCH), their position is critical – not only because they may control the appointment route, but because their support (or non-objection) will often determine whether the deal can be executed smoothly. I engage them early and share the valuation and headline terms.
Landlords and key suppliers
I check whether the buyer will be able to trade immediately post-sale: can leases be assigned, are consents required, will key suppliers continue supply, do contracts and licences need assignment/novation?
These practical points are where pre-packs succeed or fail. A beautifully drafted sale agreement is useless if the buyer can’t lawfully occupy the premises or obtain supply.
6) Buyer structure and funding: I sanity-check whether completion is real
I need confidence that the proposed buyer can actually complete – particularly where the buyer is NewCo.
I look for:
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NewCo incorporation and a functioning bank account,
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committed funding (equity, lending, invoice finance, etc.),
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realism around what funders will demand (forecasts, security, and often guarantees).
I also deal with TUPE early. Employee transfer can’t be treated as an afterthought; it affects price, liabilities, and whether the buyer’s model is viable.
7) Sale documentation: I ensure the APA is unambiguous and defensible
The pre-pack is typically implemented through an Asset Purchase Agreement (‘APA’).
My focus is on clarity:
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what assets are included and excluded,
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what (if any) liabilities the buyer assumes,
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employee position and schedules,
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apportionments and completion mechanics,
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and ensuring the consideration aligns with the valuation evidence.
If any consideration is deferred (instalments, earn-outs), I’m particularly cautious: creditors will ask whether value has truly been realised, and I need to be able to explain why the structure is still in creditors’ interests.
8) Appointment route and timing: I choose the route that fits the risk
Pre-pack execution is often about timing and control.
Depending on the case, the appointment might be:
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a QFCH out-of-court appointment (where appropriate),
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a director/company out-of-court appointment using a Notice of Intention to Appoint (NOI) to obtain interim moratorium protection, with careful attention to petition risk,
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or a court appointment (for more complex or constrained scenarios).
The important point is that I plan the route in a way that avoids last-minute procedural traps.
9) Appointment day: I complete, take payment, and manage the handover
On appointment, the moratorium takes effect, and if conditions are met I complete the APA immediately (or very shortly after), receive the consideration, and transfer the assets as agreed.
Then comes the operational reality:
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staff communications and TUPE transfer,
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customer and supplier communications,
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IT and data handover,
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book debt collection arrangements,
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practical control of the site and assets.
This is where preparation pays off. If the handover plan doesn’t exist before appointment, it becomes chaos afterwards.
10) Post-appointment: my disclosure obligations arrive quickly
The scrutiny lands immediately after completion.
I must produce proposals explaining the rationale, marketing, valuations, consideration and why a pre-pack was chosen.
I must also issue SIP 16 disclosures to creditors promptly, including buyer details, relationships, valuation and marketing information, consideration, and the explanation of why the pre-pack delivered a better outcome than the alternatives.
Where it’s a connected party deal, the evaluator report (and my assessment of it) forms part of that transparency.
11) The pitfalls I actively try to eliminate
These are the repeat offenders I plan for:
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Undervalue allegations – dealt with via robust valuations and a defensible marketing record.
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TUPE surprises – handled by modelling transferred costs and liabilities properly, not hoping for the best.
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Retention of title, liens and ownership disputes – stock and assets must be analysed carefully, with clear carve-outs or settlements where required.
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VAT treatment – I ensure the VAT position is addressed correctly, including whether Transfer of a Going Concern (TOGC) treatment applies.
12) Timescales and costs: I set expectations early
Pre-packs can be very fast – sometimes an accelerated process completes in 1–2 weeks where the cash runway is tight.
Costs are case-specific, but I make sure directors understand that pre-packs typically involve multiple professional workstreams: IP work, legal drafting, valuation fees, and evaluator fees if connected.
If the company has no money to fund that work, that fact alone will probably dictate the options.
My practical document checklist for a compliant pre-pack file
These are the documents I expect to see in a well-run pre-pack process:
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board minutes/resolutions authorising the pre-pack exploration and adviser appointments
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engagement letters (IP, valuers, solicitors, evaluator if needed)
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valuation reports and a marketing log
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draft APA and supporting assignment/novation/lease paperwork
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TUPE plan and employee schedules
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NewCo funding evidence and agreements
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appointment papers (NOI/NOA or court papers, as relevant)
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SIP 16 disclosure pack and proposals
Closing view
From my point of view, a pre-pack is not ‘a quick fix’. It’s a controlled transaction under intense time pressure – and it only works when I can evidence that the sale was properly marketed (as far as time allows), properly valued, properly documented, and genuinely delivers a better result for creditors than the alternatives.
If you would like to explore whether a pre-pack is right for you, either call or email me or use our insolvency copilot, VAi, to ask for support.