Norbain sale: What is a pre-pack administration?

Last week it was announced that the UK and exports business of Norbain had been acquired by Newbury Investments (UK) Ltd in a pre-pack administration sale.

Many questions have been coming into Info4Security about the sale, including this one: ‘What exactly is a pre-pack administration?’

We spoke to PwC UK, one of the UK’s biggest accountancy firms, where PwC insolvency partner Mike Jarvis told us:

“A pre-pack is a shortened form of the phrase “pre-packaged administration”. A pre-pack is a deal to sell the assets of a failed company, which is agreed prior to the insolvency, and is then usually completed almost immediately after the appointment of the Administrators.

“It can be the best way of preserving value for the business, creditors and shareholders. If a business enters administration it may result in disruption, uncertainty and a real certainty that the business would cease to operate, meaning losses to all stakeholders.

“A pre-pack transaction can mean a smooth transition with enhanced realisations for creditors and the preservation of value for goodwill and the brands of the business.

“If a pre-pack is applicable in an administration where you are a creditor, you will be sent information on why the pre-pack was used when you are notified of the appointment.”

KPMG statement

KPMG, who was in charge of the pre-pack Norbain sale, has released a statement detailing its part in the sale.

Will Wright, joint administrator at KPMG, said: “Norbain’s business was adversely affected by a decline in orders as customers decided to wait and see if the economy would improve before investing in infrastructure projects. The fall in income was a key factor in the company entering into administration.

“This deal marks a fresh start for the Norbain UK business and puts it on a more solid footing for the future. We received a great deal of interest from buyers keen to turn the business’ fortunes around.

“We are pleased that the process we ran allowed the company to avoid a full operational administration via a ‘pre-pack’, securing the UK jobs and protecting precious value.”

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