Regulations proposed to ‘tighten up on regulation of the pre-pack process’

Regulations proposed to ‘tighten up on regulation of the pre-pack process’

The Insolvency Service has published the outcome of its review conducted into the impact of the voluntary industry measures introduced in November 2015, which aimed to improve the transparency of connected party pre-pack sales in administration. Following the assessment, the Insolvency Service has published draft regulations which are intended to be laid before Parliament. David Kerr, of David Kerr Consulting Ltd, comments on the proposed regulations, which he says intend to ‘tighten up on regulation of the pre-pack process—in particular, where the sale of a business is to a connected person’.

The Minister for Climate Change and Corporate Responsibility, Lord Callanan, has stated that the review highlighted concerns surrounding the transparency of pre-pack sales and ‘whether they are always in the best interest of creditors’. Therefore, the proposed legislation aims to address these concerns and ‘improve confidence in the process.’ Callanan insists that measures will also be undertaken to enhance professional regulatory standards and the information provided to creditors.

The review maintains the conclusions reached by the previous ‘Graham Review’ that pre-pack sale offers the best result for creditors after an insolvency in many circumstances. Therefore, the ability to ban connected party sales in administration will not be utilised but new regulations are proposed to build on the existing measures.

Key elements of the pr

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About the author:
Pietra has completed the Bar Professional Training Course at the University of Law and was called to the Bar in 2019. Prior to the BPTC, Pietra undertook a law degree at the University of Bristol.