Moulton urges FDs to use pre-packs

FDs should seriously consider pre-packaged administrations as a way of
keeping going through tough economic conditions, according to private equity
chief Jon Moulton.

Banks are also set to start writing off companies’ debts in the next couple
of weeks rather than have firms going insolvent, he added.

Speaking at a COA Solutions’ conference, Moulton said that administration
should be made a last resort, but the worsening climate could leave FDs no

‘You may have to look at insolvency,’ he told the 150 assembled finance
The administrations, commonly known as pre-packs, rely on a buyer being found
for a company before it enters administration.

The business is sold shortly after the appointment of the administrator. The
perception among some creditors is that assets may have been sold at an
undervalued price or that goodwill has not been fully valued because of the
speed of the sale. Pre-packs have become increasingly popular with turnaround
specialists and directors of companies within the last few years.

‘Insolvencies are rising quite rapidly at the moment, but it’s about to
explode,’ Moulton said.

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