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What is pre-pack Administration? The Phoenix.


Pre-pack Administrations are a relatively new concept in that they have come about because of a change in law in 2004. It is now a lot quicker for a company to go into Administration and can sometimes just mean faxing a form to the local court.

 Administration has the effect of creating a moratorium where no creditors can take any action against the company including; banks, landlords, HMRC, suppliers, HP companies, employees etc.

 A pre-pack means that as soon as the company goes into Administration it is sold immediately on to either the existing management team or a new management team. This clearly creates controversy and leaves a number of unhappy creditors.

 It is perfectly legal but needs to be dealt with properly and creditors need to be kept informed as to why decisions have been made and why a sale has taken place so quickly after the Administration.