Pre-pack administration — for the buyer
A pre-pack lets you complete the acquisition at the exact moment the administrator is appointed — no trading gap, no customer defection window. Here's what the buyer must know about SIP 16, the Pre-Pack Pool, and connected-party rules.
Marketing runs 2–6 weeks pre-appointment; the sale exchanges the moment the administrator takes office. No trading gap.
SIP 16 disclosure within 7 days; Pre-Pack Pool referral for connected parties; potential Sch B1 para 74 challenge.
The buyer's timeline
- Weeks −6 to −4: Approach directors or their IP adviser. Sign NDA. Access data room.
- Weeks −4 to −2: DD, funding lock-in, TUPE analysis, APA drafting.
- Week −1: IP files Notice of Intention to Appoint (Sch B1 para 26). Solicitors agree final APA.
- Day 0: Administrator formally appointed. APA exchanges simultaneously. Funds transferred. Buyer takes control same day.
- Day +7: SIP 16 statement issued to creditors. Buyer named. Marketing process disclosed.
- Day +8 to +56: Administrator's proposals to creditors under Sch B1 para 49 within 8 weeks.
SIP 16 — what buyers must accept
The administrator's SIP 16 statement publicly discloses: (i) source of the introduction, (ii) marketing activity undertaken, (iii) valuations obtained and by whom, (iv) alternative courses considered, (v) the identity of the buyer, (vi) the price and payment terms, (vii) any connected-party relationship. See our SIP 16 statement guide for the full checklist.
Buyers should assume everything about the deal will become public. Structure the price and the narrative accordingly. Where the price is at the low end of the valuation range, be ready to explain why (TUPE cost, redundancy funding, working capital burn, brand rehabilitation cost).
Related
Frequently asked questions
What is a pre-pack administration from the buyer's side?
A pre-pack is a sale of the business or its assets negotiated before the administrator is formally appointed, and completed at the moment of appointment. The buyer effectively signs contracts on day one, taking the trading business free of the insolvent company's historic unsecured debts.
How is the price justified?
Under SIP 16, the administrator must produce a disclosure statement to creditors within 7 days of appointment covering marketing, valuation methodology, alternative options considered and the connected-party status of the buyer. Buyers should expect their price to be tested against independent valuation reports.
What is the Pre-Pack Pool?
For connected-party sales (directors, shareholders, associates buying back the business), the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 require either creditor approval or an independent Pre-Pack Pool evaluator report before completion. The evaluator opines on whether the deal is 'not unreasonable'.
Am I a connected party?
Yes if you are a director, shadow director, associate, close family or an entity controlled by any of them. SIP 13 governs professional standards for these sales and applies extra disclosure and marketing requirements.
How fast do pre-packs complete?
The exchange happens simultaneously with the administrator's appointment. Buyer preparation typically runs 2–6 weeks pre-appointment; the final day itself is a coordinated legal exchange followed by trading resumption the next morning.
What are the buyer's risks?
Reputation risk (public SIP 16 disclosure names you), incomplete DD, warranty/indemnity absence, TUPE surprises and the possibility that a creditor challenges the sale under Sch B1 para 74 (unfair harm). The court rarely unwinds pre-packs but can order compensation.
Do employees automatically transfer?
Yes — TUPE 2006 regulation 4 applies to pre-packs. Employees transfer on existing terms. Reg 8 relief for accrued liabilities is available in true insolvency where the transfer is under an insolvency procedure not opened with a view to liquidation.
Can I get the brand and IP only, without the trading business?
Yes — an asset-only pre-pack (IP register, domains, customer lists, trademarks) is common where the operational business is not viable. TUPE does not transfer because there is no economic entity being transferred.
What is a 'phoenix' pre-pack?
Colloquially, a pre-pack where former directors buy back the business into a new company (often called Newco). Legal, but subject to CDDA 1986 s.216/217 restrictions on reusing similar company names for five years.
What documents will the administrator want?
Signed NDA, funding proof letter, buyer profile, indicative offer breakdown by asset class, TUPE acknowledgement, and — if connected — Pre-Pack Pool referral evidence and marketing timeline.