What is a pre-pack pool and why is it important?

The pre-pack pool is an independent body established to provide oversight of pre-pack administration sales where the buyer is connected to the insolvent company, such as existing directors or shareholders. Because pre-packs can raise concerns about transparency and fairness, the pre-pack pool allows directors to submit the proposed transaction for review. While the pool does not have the power to block sales, it issues an opinion on whether the deal appears reasonable. This opinion can then be shared with creditors to reassure them that the sale achieves fair value. Using the pre-pack pool is voluntary, but administrators are encouraged to recommend it in connected party sales to increase creditor confidence and reduce the risk of challenge. The pool’s existence reflects the balance between allowing businesses to be rescued quickly and ensuring that creditor interests are not undermined by undervalued sales. It is an important safeguard that adds credibility to the pre-pack process.