ANOTHER SUCCESSFUL PRE-PACK POOL APPLICATION FOR STERLING
ANOTHER SUCCESSFUL PRE-PACK POOL APPLICATION FOR STERLING
The team at Sterling have recently helped another client complete a successful application to the Pre-Pack Pool. That means we still have a 100% record of success with these applications! But what is the Pre-Pack Pool and who needs to make an application to it?
What is a Pre-Pack?
When a company enters administration, the administrators will, where possible, market the business for sale. The administration process can be protracted however, and during this time of uncertainty there can be a dramatic decline in the strength of the business due to damage to the reputation of the company, suppliers withdrawing services, customers shying away and a reduced value of assets such as book debts and work in progress. There are occasions, therefore, when a rapid sale of the business is essential in order to realise its’ full value for the creators.
In these occasions, it is common for the sale of the business to be negotiated prior to appointment of an administrator with completion of the sale taking place as soon as, or very shortly after, the administrator is appointed. This arrangement has become known as a Pre-Pack.
So what is the Pre-Pack Pool?
Whilst Pre-Packs are a vital tool in the armoury of insolvency practitioners, historically numerous concerns were raised that there was a lack of transparency in the process, especially where the proposed buyer was previously connected to the company that is being sold, perhaps as a director or shareholder, for example. As a result of these concerns, the government commissioned a review into Pre-Packs, now known as the Graham Review, which identified several recommendations for changes to the way in which Pre-Packs are managed.
One of the key recommendations was the creation of the Pre-Pack Pool. This is a pool of experienced Insolvency Practitioners who are engaged to provide an external independent opinion as to whether a Pre-Pack sale, to a previously connected party, is not unreasonable given its unique circumstances. Their aim is to increase the transparency of the Pre-pack process in situations where connected parties are involved, and to provide assurance for creditors that there has been some form of independent scrutiny. Whilst an application to the Pre-Pack Pool is optional, it can be considered best practice to do so and the majority of insolvency practitioners are likely to encourage applications to be made.
How is a Pre-Pack Pool Application made?
The application is made by the connected party direct to the Pre-Pack Pool using an online portal, which asks certain standard questions to establish the identities of the business being sold and the proposed buyer, and allows additional supporting information to be appended. It is essential that full supporting information is made available to enable the pool member to reach their determination. The application costs £800 plus VAT which must be paid before any opinion is issued.
How can Sterling Corporate Finance help?
We can prepare a detailed report on your behalf which gives the Insolvency Practitioner, allocated to your case by the Pre-Pack Pool, all the required details to assess your individual case for a pre-pack. We have the experience and knowledge to know what the Pre-Pack Pool are looking for and what supporting information is required to make a successful application.
If you do require some help please contact us:
Stuart Jobbins Lyndsey Shaw
Mobile: 07480 836451 Mobile: 07813 896091
Email: sjobbins@sterlingcf.co.uk Email: lshaw@sterlingcf.co.uk