Pre-pack administration—connected person sales
Pre-pack administration—connected person sales

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Pre-pack administration—connected person sales
  • When do the Regulations apply?
  • What must the administrator obtain?
  • Who must obtain the qualifying report?
  • Who will prepare the qualifying report?
  • What must the qualifying report contain?
  • What happens once the qualifying report is obtained?
  • What is the impact of the qualifying report on the timing of the disposal?
  • Where must the qualifying report be sent?

A pre-pack administration sale is a sale of a company’s business or assets, or both, which has been arranged in advance of a company entering administration. For further reading on pre-packs generally, see Practice Note: What is a pre-pack administration sale?

This Practice Note considers the additional reporting obligations required pursuant to the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, SI 2021/427 (the Regulations) where the pre-pack sale is to a buyer connected with the seller company.

The Insolvency Service have issued guidance on the Regulations in addition to Dear IP—Issue No 126 (April 2021).

When do the Regulations apply?

Where an administration commences on or after 30 April 2021, the administrator must comply with the requirements set out in the Regulations. For the purposes of the Regulations, an administration commences on:

  1. the appointment of an administrator pursuant to the paragraphs 14 or 21, Schedule B1 to the Insolvency Act 1986 (IA 1986), or

  2. the making of an administration order

What must the administrator obtain?

If the administrator wishes to make a substantial disposal to a connected person during the period of 8 weeks beginning with the day on which the company enters administration, the administrator must:

  1. obtain the approval of the company’s creditors to the disposal, or

  2. ensure the connected person obtains a qualifying report

A substantial disposal is defined in the Regulations to mean a

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