The comments come as suppliers to the print industry have criticised new guidelines aimed at increasing transparency in pre-pack administrations, saying that they do not go far enough towards ensuring best value for creditors.
Carl Jackson, national head of the London-based administrator, said the deals are an essential part of "an insolvency firm's toolkit".
He added: "The administrator is duty-bound to act on behalf of creditors to maximise any potential return and they will only agree to a pre-pack if it ticks that box."
Comparing the benefits over a standard administration sale, Jackson said pre-packs can maximise the returns to the secured creditor, reduce the levels of creditor claims and allow a creditor access to future profit at the failed business.
According to Jackson, pre-packs can sometimes prevent further insolvencies of suppliers or creditors through the continuity of supply, as well as preserving the jobs of employees.
He added: "Allowing a business to continue can help to reduce the domino effect we saw with Rover Cars, when a large number of suppliers failed as a result.
"We saw this, more recently in December when Woolworths' demise contributed to Zavvi's failure at the start of year.
"Ultimately, it is important to recognise that pre-pack insolvencies are a key option in an insolvency practitioner's toolkit."
His comments came as Bridge Communications, the Essex-based direct mail specialist was sold by Tenon in a pre-pack to Euro Media Solutions, which is headed up by Paul White, on 29 December – the same day that it went into administration.
Pre-pack benefits:
- Prevention of further insolvencies
- decrease in redundancies
- maximum return to the secured creditor
- reduced level of creditor claims
- future profit participation
- suppliers can increase pricing
