Recently we have seen some household names in the business press that are in distressed circumstances, such as Blacks the leisure group and La Senza lingerie chain.

Both of these companies were placed into administration and then immediately bought by other non-related companies.

For those that are unaware, this type of transaction is known as a pre-pack deal.  This is where a distressed business arranges with a third party (or sometimes a new company set up by the distressed business' directors) and the insolvency practitioner to acquire the business.  The "Buyers” arrange the sale of the business immediately from the administration of the business.  Hence the description of "Pre-Packaged”.

There are plenty of business' that are not household names that carryout this transaction.  There has been bad press in relation to pre-packaged deals and the creditors not getting paid however, on a positive note jobs can be saved in the ongoing business.

If your business is in distress and you require any information relating to Pre-Packs or if you need advice about buying or selling a business please contact Shahid Azam  Shahid is an Associate Solicitor at Clough & Willis and advises on all aspects of non-contentious Commercial and Corporate law