Pre-pack administrations have been more widely used in the last few years following the financial crisis, reports Keith Steven managing director of KSA Group.
High profile cases like Blacks Leisure, La Senza, DTZ, Bon Marche, and Alexon have meant there has been a spotlight on such deals where the assets of the business are sold to a third party or newco set up by management
In a pre-pack the deal is worked out before the application to court for the administration order. All this happens in one movement and in the past, unsecured creditors, such as trade suppliers, may not even be aware that the business is in difficulty.
This sort of deal can make the people who lose out, suspicious that they have been ‘stitched up’. The deals that attract the biggest criticism are those where the new company that has bought up the business, is closely associated with the former owners.