I know it doesn't sound ethical and I don't now about this particular example at all but Company Law does help to keep businesses and directors going even through periods of insolvency unless of course Freud has taken place
If a business is failing through unforeseen bad debts, claims or withdrawal of funding or trading to the point of insolvency, yes it it terrible for creditors but quite often creditors will gain longer term if they can help to keep the business going as many creditors are regular suppliers and will be required for support
Once a company is insolvent, the company directors responsibility is with the creditors and no longer the shareholders and if a pre pack administration can be shown to help the magority creditors by keeping the business going and continue to trade then it's entirely ethical
Exactly this....
Ethics often do get a little trampled on in pre-packs, but you're quite right. It would be a breach of fiduciary duty not to consider the options and creditors could get 50p in the pound back (for example) eventually.
