Pre-pack administration sales: English court says marketing process must be adequate

A creditor (who was also a shareholder) applied to court to place a company into administration. The creditor's application involved a planned pre-packaged sale of the company's business and assets to a third party. 

The High Court initially refused the application due to an inadequate marketing exercise for the sale.

Background

London Antiaging Clinic Ltd operated a health clinic. Its majority shareholder and funder, Marko Ventures Ltd (MVL), sought an administration order after no longer being willing to provide financial support and demanding repayment of its outstanding debt. The application proposed a pre-packaged sale of the company's business and assets to a party connected to MVL (Reborne). 

The application was adjourned because the marketing process was rushed and little information was provided. The minority shareholder (LMA), opposed the application arguing that the shareholder agreement contained an implied term that MVL could not seek the company's administration based on debts owing to it.

Decision

At the adjourned hearing, the court exercised its discretion to make an administration order, finding that:

• a proper marketing exercise had now been carried out and the options had been properly explored
• there was no implied term in the shareholder agreement preventing MVL from bringing the application
• the company was insolvent
• the proposed sale to Reborne represented the best outcome for creditors. 

Key takeaways

This ruling underscores the importance of undertaking comprehensive marketing exercises for pre-packaged administration sales which the courts have recognised are at risk of abuse and disadvantaging creditors. These types of sales will come under particularly careful scrutiny where the sale is to a connected party. 

Marko Ventures Ltd v London Antiaging Clinic Ltd [2025] EWHC 340 (Ch).

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.