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Can I use a Pre-Pack to Settle a Shareholder Dispute?

Yes you can. The company has to be genuinely insolvent (see the two definitions below) and the business has to be advertised for sale. If one of the shareholder/directors is the winning bidder they can buy the business and take control even if the other owner doesn’t want them to have control.


If the company is insolvent then a pre-pack Administration can be a method of saving a business and allowing it to be sold to a new owner. This is even if the new owner is partly an old owner. The key issues are that the business has been advertised for sale and the buyer is paying the best price.

There are two legal definitions of insolvency and these are;

  1. the company has liabilities that exceed its assets or,
  2. that the company is unable to pay its debts as they fall due.

Using a pre-pack administration to take control of a business in a shareholder dispute is obviously going to leave the non-winning shareholder very unhappy but it is a legal mechanism to resolve the deadlock without going to Court.

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