Why a Pre-Packaged Sale Was Chosen Over Other Insolvency Options
Introduction
When Huboo Technologies Limited (now Hub Realisations Limited Company number 09727464) entered administration on 23 December 2024, administrators Interpath Ltd faced several choices on how to handle the company’s insolvency. With millions in outstanding debts, 643 employees, and ongoing business operations, they had to decide whether to:
- Continue trading in administration
- Attempt a Company Voluntary Arrangement (CVA)
- Liquidate the business
- Sell it as a going concern
- Execute a pre-packaged administration sale
Ultimately, a pre-packaged sale was chosen, allowing Huboo’s business and assets to be sold for just £9 to Brislington Tradeco Limited (backed by Baaj Capital Limited). This decision ensured business continuity, protected some creditor interests, and transferred employees under TUPE regulations.
However, pre-pack sales are often controversial, especially when creditors receive little to no repayment. This article examines why the pre-packaged sale was selected and why other insolvency options were not feasible.
What is a Pre-Packaged Administration Sale?
A pre-pack administration is when a company arranges the sale of its business before officially entering administration. The sale is executed immediately upon appointment of administrators, ensuring a seamless transition.
Why are Pre-Pack Sales Used?
Pre-packaged sales are favored in certain situations because they:
- Allow business continuity – The company avoids immediate closure.
- Preserve jobs – Employees can transfer to the new owner under TUPE regulations.
- Maximize asset value – A quick sale prevents depreciation of assets.
- Avoid customer loss – Orders and contracts can continue without disruption.
- Offer better creditor returns than an outright liquidation.
However, creditors and suppliers often criticize pre-pack sales when businesses are sold for nominal amounts while debts remain unpaid.
The Alternative Options Considered (And Why They Were Rejected)
1. Continuing to Trade in Administration
Administrators could have kept the company running while seeking a buyer or funding solution.
Why This Option Was Rejected:
- No available funding – Huboo had a £6 million funding gap and no investors willing to provide cash.
- December payroll of £1.2 million was unpaid – Without immediate capital, the company could not pay wages.
- High trading risks – A prolonged administration could have worsened financial losses.
- Risk of customer loss – Public knowledge of insolvency might have led to contract cancellations.
- No viable turnaround plan – Even if funding had been secured, Huboo had never generated a profit.
⛔ Conclusion: Trading in administration was not financially feasible.
2. Company Voluntary Arrangement (CVA)
A CVA allows a business to restructure debts while continuing to trade, making scheduled payments to creditors over time.
Why This Option Was Rejected:
- Investors withdrew support – A group of shareholders initially proposed a £6 million funding injection via a CVA, but the lead investor pulled out on 12 December 2024.
- High creditor pressure – HMRC had already threatened to wind up the company over unpaid taxes.
- Ongoing losses – Even with a CVA, Huboo had no path to profitability.
⛔ Conclusion: A CVA became impossible when investor backing disappeared.
3. Liquidation
A liquidation would involve shutting down the company, selling all assets, and distributing proceeds to creditors.
Why This Option Was Rejected:
- Lower recovery value – Selling warehouses, IT systems, and stock in a liquidation would have generated far less than a going concern sale.
- Employees would have been made redundant – This would increase creditor claims, as employees would seek compensation from the insolvency process.
- Customers would lose fulfillment services – A liquidation would have destroyed relationships with clients, further reducing asset value.
- Administrators believed a sale would provide a better return – The pre-pack sale secured funding for some debt repayments, while a liquidation would have left even secured creditors with nothing.
⛔ Conclusion: Liquidation would have resulted in worse outcomes for employees, customers, and creditors.
4. Selling the Business as a Going Concern
The preferred insolvency approach is usually to sell a business as a going concern, attracting a buyer willing to take over operations and repay some debts.
Why This Option Was Rejected:
- No solvent buyers came forward – Despite approaching 34 potential buyers, none submitted viable offers.
- Huboo’s financial problems discouraged buyers – Given continued losses and cash flow struggles, investors were unwilling to take the risk.
- A longer sales process was not possible – With £1.2 million in unpaid wages and creditor pressure mounting, there was no time for prolonged negotiations.
⛔ Conclusion: With no solvent buyers, a pre-pack was the only viable alternative.
Why the Pre-Packaged Sale Was the Best Option
Given the lack of funding, no viable CVA, and the failure to secure a solvent buyer, a pre-pack sale offered the best available outcome.
Key Benefits of the Pre-Packaged Sale:
✅ Ensured Business Continuity – Operations continued under new ownership, preventing customer disruptions.
✅ Protected 643 Jobs – Employees were transferred under TUPE regulations, avoiding mass redundancies.
✅ Maximized Creditor Returns – The pre-pack delivered a better outcome than liquidation.
✅ Allowed Quick Execution – The deal closed immediately, preventing further financial deterioration.
Who Benefited from the Sale?
- Brislington Tradeco Limited (Baaj Capital Limited) – Acquired Huboo’s operations for just £9, securing valuable assets at a low cost.
- Customers – Order fulfillment continued, avoiding disruptions.
- Employees – Jobs were preserved, but some wages remained unpaid.
Who Lost Out?
❌ Kreos Capital VI (UK) Limited – Lost £22.6 million.
❌ MIC Capital Partners – Lost £3 million.
❌ HMRC – Will receive only a partial recovery.
❌ Trade Creditors & Suppliers – Owed £6.8 million, but will receive nothing.
❌ Unsecured Investors – Owed £790,991, but will receive no repayment.
Was This a Fair Outcome?
While a pre-pack sale prevented complete business closure, it remains controversial because:
- Creditors suffered major losses.
- The business continued under new ownership while suppliers went unpaid.
- The purchase price (£9) was symbolic, raising questions about whether the deal represented fair value.
However, alternative options (CVA, liquidation, trading in administration) would have resulted in even worse losses.
Conclusion
The pre-packaged administration sale of Huboo Technologies for £9 was the best option under the circumstances, ensuring business continuity, job protection, and a controlled insolvency process.
Despite its benefits, the sale left creditors with massive unpaid debts, highlighting the challenges of scaling without profitability.
The next article in this series will explore the future implications of Huboo’s failure and how it will affect the logistics and eCommerce fulfilment industry.
Stay tuned!
