Interrogating and Indulging Prepacks: Re Kayley Vending

Abstract

The patois “prepack” in UK corporate insolvency practice is a shorthand description of a strategy to sell an insolvent debtor’s business, typically involving the following scenario: A sale of all or part of the debtor’s business is struck in principle between the relevant parties prior to the commencement of a formal insolvency proceeding (usually administration) so that as soon as the relevant insolvency officeholder is appointed, he will use his power to procure an immediate execution of the pre-agreed sale. The debtor will then be liquidated. In the recent case of Re Kayley Vending [2009] EWHC 904 (Ch), the court gave some helpful guidance on the prepack practice. It is no exaggeration to say all insolvency practitioners should familiarise themselves with the decision.

Keywords: UK corporate rescue, prepack, prepackaged administration, administrators' preappointment costs

JEL Classification: K10, K19, K20, K29, K30, K39, K40, K41, K49