Small Business, Enterprise and Employment Act 2015—restructuring and insolvency

Small Business, Enterprise and Employment Act 2015—restructuring and insolvency

What will the Small Business, Enterprise and Employment Act 2015 (SBEEA 2015) mean for restructuring and insolvency practitioners? Phillip Sykes, Baker Tilly’s London head of restructuring and recovery, and Mark Sands, personal insolvency expert and partner at Baker Tilly, consider the likely implications of the new legislation.

Original news

SBEEA 2015 is intended to ensure that the UK continues to be recognised as a trusted and fair place to do business and to open up new opportunities for small businesses to innovate and compete. It includes provisions to give small businesses greater access to finance sources, increase transparency around who owns and controls UK companies, require the payment practices of the UK’s largest companies to be reported and introduce new insolvency measures to prohibit and limit certain aspects of pre-pack sales if deemed necessary.

SBEEA 2015 will make changes allowing the Secretary of State to allow, prohibit or impose conditions on the sale of assets by an administrator to connected persons—what is the reason for this change and what do you think will be the likely impact?

Phillip Sykes: This is a reserve power that has been taken by government in connection with Teresa Graham’s report into pre-pack administrations (pre-packs) for the Department of Business, Innovation and Skills (BIS). The Graham report recommends the creation of an independent body called the Pre-Pack Pool, the establishment of which is now well under way. The intention is that where a connected party—usually one or more of the directors—want to buy back their business through a pre-pack, they will approach the pool for an independent review of the proposed deal prior to it being completed. The report to creditors on the administration in accordance with SIP 16 will confirm whether such an independent review was carried out and whether or not the pool sanctioned the deal.

While such a review is not mandatory, the report to creditors will be expected to

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.