Pre-pack administration returns

Which of the following statements best describes a pre-pack administration?

It is the sale of the assets of an insolvent business after the commencement of an administration

It is the sale of an insolvent business' assets six weeks prior to administration

It is the sale of the assets of an insolvent business has been agreed prior to the commencement of an administration

It is the sale of an insolvent business' assets six weeks after administration

Why are sales often agreed without the business being advertised?

Because nobody really wants to buy an insolvent business

Because it helps protect the goodwill of the business and preserve relationships that may otherwise be damaged

Because insolvent business owners do not have the time to advertise

Because insolvent business owners rarely have the cash to advertise

To whom are businesses in pre-pack administration often sold?

A purchaser that is not linked or involved with the insolvent business

The Exchequer

Local councils where possible

A purchaser that is linked or involved with the insolvent business

Which two new conditions must be satisfied before an administrator can dispose of company assets to a connected party during the first eight weeks following administration?

Administrators must advertise the business for six weeks and must seek prior approval of credits

Administrators must seek the prior approval of creditors and write a report for the Registrar of Companies

Administrators must seek the prior approval of creditors or enlist a report from an independent evaluator that says the deal is in the best interest of creditors

Administrators must write a report for the Registrar of Companies and advertise the business for six weeks prior to sale

Why might it be positive to seek the approval of creditors prior to concluding a pre-pack sale?

Because it provides complete transparency and prevents finger pointing down the line

Because it is hard to sell a business without creditor approval

Because creditors have a claim on the business after the sale

Because creditors have the power to stop a sale

Which of the following is a reason why seeking creditor approval could be problematic?

Because creditors are often only thinking of themselves during an administration

Because creditors rarely give their approval anyway

Because creditors want sales that will work out well for them and may block easy and quick sales

Because it can slow the process down to the point where the benefits of a swift transaction are lost

Which is the most likely route to be followed in most pre-pack scenarios?

Creditor approval

The advertisement of a business for six weeks before the commission of an independent evaluator

The use of an independent evaluator followed by creditor approval

The use of independent evaluators

What does an administrator need to do before a disposal?

To provide a report to the creditors and the Registrar of Companies setting out their rationale for proceeding with the disposal

To provide a report to the creditors

Ensure all creditors are happy to proceed

Ensure a quorum of creditors is happy to proceed

What is the purpose of the new rules around pre-pack administration?

To ensure transparency

To ensure swift sale of businesses in trouble

To prevent creditors from extracting maximum value from a still-viable business

To lessen the powers of creditors in insolvency situations

Why are new rules for pre-pack administration important now?

Because low interest rates mean creditors are more concerned about retrieving their money

Because COVID-19 will likely cause a large number of companies to become insolvent

To prevent the fraudulent sale of assets

Because creditors have approached the government to complain about business sales they consider to have been poor decisions

Pre-pack administration returns

Which of the following statements best describes a pre-pack administration?

Why are sales often agreed without the business being advertised?

To whom are businesses in pre-pack administration often sold?

Which two new conditions must be satisfied before an administrator can dispose of company assets to a connected party during the first eight weeks following administration?

Why might it be positive to seek the approval of creditors prior to concluding a pre-pack sale?

Which of the following is a reason why seeking creditor approval could be problematic?

Which is the most likely route to be followed in most pre-pack scenarios?

What does an administrator need to do before a disposal?

What is the purpose of the new rules around pre-pack administration?

Why are new rules for pre-pack administration important now?

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