Statement of Insolvency Practice 16 (SIP 16)—pre-packaged sales in administration
Statement of Insolvency Practice 16 (SIP 16)—pre-packaged sales in administration

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

  • Statement of Insolvency Practice 16 (SIP 16)—pre-packaged sales in administration
  • When does SIP 16 apply?
  • What are the key elements of SIP 16?
  • Preparatory work
  • Marketing
  • Disclosure (the SIP 16 statement)

Statement of Insolvency Practice 16 (SIP 16)—pre-packaged sales in administration

Insolvency practitioners (IPs) are required to comply with both legislation and Statements of Insolvency Practice (SIPs). SIPs are a series of guidance notes issued by the Joint Insolvency Committee, see Practice Note: Statements of Insolvency Practice (SIPs)—a quick guide.

SIP 16 was introduced to prevent perceived possible misuse of pre-pack administrations sales and requires an administrator to take various actions in relation to:

  1. preparatory work

  2. marketing

  3. disclosure

A revised SIP 16 (effective from 30 April 2021) was released to reflect the additional statutory obligations placed on administrators as a result of the Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021, SI 2021/427. For further reading on the regulations, see Practice Note: Pre-pack administration—connected person sales.

When does SIP 16 apply?

SIP 16 states that it applies to all pre-packed sales in administrations, irrespective of who the purchaser may be.

The amendments made to SIP 16 (effective from 30 April 2021) appear to extend the definition of ‘connected’ to include any person connected to a secured creditor of the company (for example, a lender owned vehicle which is purchasing the distressed assets) (see paragraph 6 of SIP 16). This is despite such a person not being caught by the definition of connected person in the Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021, SI 2021/427 (which adopt the definition of ‘connected person’ in paragraph 60(A)(3) of Schedule B1

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