Pre-pack administration-what are the benefits?

Pre-pack administration has been touted as the best method to deal with business bankruptcy. However, some people feel that the creditor’s interests are not usually catered for. This article will examine some of the benefits accruing from the use of this method when winding up a company. Using a pre-pack arrangement the creditors can be able to extract value from a bankruptcy bound company. If you compare sale of company assets through a traditional liquidation with sale through a pre-pack arrangement, the pre-pack will generate more cash. This is because the assets have more value to the old company directors than to any other investor who may be interested in the company. The pre-pack also ensures that all the assets are disposed off together, unlike in the case of a normal liquidation whereby some of the assets might fail to get a potential buyer. Another benefit of liquidating with pre-pack administration is the retention of the company image. This means that the company will continue to get unsecured debtors.