What is a pre-pack?

A pre-pack insolvency arrangement, also known as a pre-pack, is when an insolvent company (Oldco) sells its assets at market value to another entity (Newco). That allows the company to continue trading through a new structure.

A pre-pack is not a legal alternative to voluntary administration and liquidation because the Oldco would go into insolvency and a liquidator or voluntary administrator would review the transaction. Pre-packs are different to phoenixing, which involves selling assets below market value to another entity.