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<p>A pre-packaged sale in administration, whereby the sale of all or part of the business
is arranged prior to the company entering formal insolvency and realised on or immediately
after the appointment of the administrator, is a valuable business rescue tool. Pre-pack
sales help to avoid a deterioration of the value of the company’s business between
appointment of the administrator and sale, meaning there is more money available for
creditors, including the pension scheme. In most cases where pre-packs are used, the
only alternative would be the collapse of the business and the loss of all employees’
jobs.</p><p> </p><p>The government is aware of concerns about the transparency of
pre-pack sales, particularly where a business is sold to a person connected with the
old company. It is currently evaluating whether legislative measures are necessary
to regulate pre-pack sales to a connected person, following a review of a package
of voluntary industry measures implemented in 2015 to improve creditor confidence
in pre-packs. As part of the review the government liaised with the Pension Protection
Fund, which made clear in its response to concerns raised by the Chair of the Department
of Work and Pensions Select Committee, that it does not fundamentally take issue with
pre-packs but where there are concerns, these are referred to the Pensions Regulator
for investigation.</p>
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