The Compendium

A Comprehensive Companion for All in the Insolvency and Restructuring Profession

Pre-Pack Pool

The pre-pack pool is an independent body of experienced business people set up in response to a series of recommendations contained in the report on prepackaged Administrations.

The pool member will offer an opinion on the purchase of a business and/or its assets by connected parties to a company where a pre-packaged sale is to be proposed by an Administrator. Only one member of the pool will deal with an application.

If viewed favourably, the pool member will issue a response to the effect that it is not in their opinion unreasonable to proceed.

A viability review may be included with the pre-pack pool application. This should describe the measures that will be put in place to ensure business survival for a minimum of 12 months, plus how business operations will differ in comparison with the failed company.

A viability review is of particular importance if payment for the purchase of assets is deferred, and offers more confidence in the company’s ability to trade profitably in the longer-term.

The pool member is expected to provide their opinion within 48 hours of an application being submitted. A pre pack sale by its very nature is a fast-moving process, and the maximum 48-hour timescale has been set to minimise delays or disruption.

There are three outcomes for an application to the pre-pack pool:

  • Nothing found to be unreasonable: sufficient information has been provided by the buyer, and there is nothing to suggest that the proposed purchase is unreasonable.
  • Limited evidence: although supporting evidence is limited, nothing unreasonable has been found in the evidence provided.
  • Not enough evidence: there is insufficient evidence or information to persuade the pool member that a pre pack sale is a reasonable proposition.

Even if a pool member is unable to give a positive opinion, the sale remains in the control of the administrator. It is one of their duties under the rules of SIP 16 to justify any decision they make to the creditors, and any other interested parties.

[See ‘Pre-Pack’, ‘Pre-Packaged Administration’, ‘Administrator’, ‘Going Concern Basis’ and ‘Administration’.]