Pre-Pack Liquidation
Close an insolvent company while arranging an orderly sale of assets. "Pre-pack liquidation" is a term people use when a planned asset sale happens alongside liquidation.
What is "Pre-Pack Liquidation"?
"Pre-pack liquidation" is a commonly used phrase, but it's not usually a formal legal procedure in the same way a pre-pack administration is.
In most cases, when someone says "pre-pack liquidation", they mean one of the following:
A CVL (Creditors' Voluntary Liquidation) with a planned asset sale
A buyer is lined up, valuations are obtained, and the sale is completed properly once a liquidator is appointed.
A pre-pack administration sale, followed by liquidation
The business/assets are sold in administration, and the original company may later be placed into liquidation to close it down fully.
If you've been advised to consider a "pre-pack liquidation", we'll help you understand what's actually being proposed, whether it's appropriate, and what risks to avoid.
When is "Pre-Pack Liquidation" Considered?
This route is typically discussed when:
You're under increasing creditor pressure and need a structured way forward
The company is insolvent and can't realistically be rescued
There's value in the assets, trading name, equipment, stock, or goodwill
You want to close the old company properly, but preserve parts of the business through a compliant sale (where appropriate)
You need clarity and control before matters escalate (for example, the risk of legal action)
"Pre-Pack Liquidation" Process
Every case is different, but this is the typical journey:
Creditor Pressure Builds
Usually it starts with mounting pressure — demands, final notices, debt collection activity, or threats of legal action.
Warning: Leaving it too late can reduce your options and increase the risk of forced action.
Speak to a Licensed Insolvency Practitioner
Before any decisions are made, it's crucial to get professional advice. A licensed IP can confirm whether liquidation is the correct route and how any sale should be handled.
Independent Asset Valuation
If an asset sale is planned, the assets must be valued properly with documentation. This protects you and helps show the sale has been handled fairly.
Important: Selling assets for less than their true value can lead to serious issues for directors.
Buyer Identified + Funding Checked
A buyer is identified (this could be a third party, or in some cases a new company). Whoever the buyer is, they must be able to pay for the assets, and the transaction must be properly recorded.
Company Enters Liquidation (CVL)
Once the decision is made, the company enters CVL and a liquidator is appointed. The liquidator's job is to act in the interests of creditors and make sure assets are dealt with correctly.
Sale Completion + Company Closure
Where appropriate, the sale completes under the correct process, and the old company proceeds through liquidation towards closure.
Note: If directors plan to carry on trading after liquidation, there may be restrictions around using the same company name. This should be discussed early.
Advantages of a Planned Asset Sale in Liquidation
Providing it's suitable for your situation, potential benefits include:
Disadvantages of "Pre-Pack Liquidation"
You should also understand the downsides:
How Much Does "Pre-Pack Liquidation" Cost?
There's no one-size-fits-all cost because every situation is different. Pricing depends on:
- Number of creditors
- Number and type of assets
- Employees and complexity
- How much work is required around valuations and sale documentation
Get Everything in Writing
Before you appoint anyone, always ask for all costs and steps in writing. This helps avoid surprises later.
"Pre-Pack Liquidation" vs Pre-Pack Administration
A lot of directors compare these two options:
Pre-Pack Administration
Generally used when the aim is business rescue (selling the business/assets through administration so trading can continue).
Best for: If your goal is to preserve the business and jobs.
"Pre-Pack Liquidation"
Usually refers to closing the company via liquidation, with a planned asset sale where appropriate.
Best for: If the business cannot be saved and closure is the priority.
Why Seek Advice Early?
If your company is struggling, early advice can protect you and keep more options available.
Delaying decisions can increase creditor action, reduce control, and create more risk for directors later on.
Frequently Asked Questions
Frequently Asked Questions
Clear answers to the most common worries directors have when facing insolvency.
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