A pre-pack is the process of selling the assets of a company immediately after it has entered administration. It is most likely that the previous directors or management purchase the assets of the company from the administrator and set up a new company.

This process has advantages in that it enables the administrator to realise a greater amount for the assets due to business continuity and the goodwill of the company are preserved. The employees of the company are also transferred to the new company preserving jobs.

Pre-packs have attracted criticism because of the appearances it gives to unconnected parties that the company has just continued without its creditors. SIP 16 was introduced in January 2009 to assist Insolvency Practitioners in pre-pack cases. It was designed to make the process more transparent for creditors and to ensure that fair value was obtained for the assets.