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What are the new rules governing connected sales in pre-pack Administrations?

Last updated: September 29, 2021

The quick answer

New rules governing the connected sale in pre-pack Administrations come into force on the 30th April 2021. This will mean that a company must be in Administration for at least eight weeks before the substantial business and assets can be sold to a connected party.

In more detail

The new rules covered under “The Administration (Restrictions on disposal etc. to connected persons) Regulations 2021” should come into law on the 30th April 2021.

These rules are designed to stop the quick sale of assets in an Administration by pre-pack to a connected party. There are some exemptions including:

  • If creditors approve the sale.
  • If an independent written opinion (for or against the sale) is given to the connected party purchaser by a specialist advisor called an Evaluator.

The independent report must contain:

  • A statement that the individual making the report meets the requirements for acting as an Evaluator.
  • A statement as to what relevant knowledge and experience the Evaluator has, to make a report.
  • Details of the professional indemnity insurance held by the Evaluator.
  • Details of the relevant property associated with the “substantial disposal”.
  • Disclosure of previous qualifying reports obtained by the connected party.
  • Details of the nature of the consideration that is to be provided for the relevant property and the value of that consideration expressed in pounds.
  • Details of the connected party and their connection to the company; and
  • Whether or not the evaluator is satisfied that the consideration to be provided for the relevant property and the grounds for the substantial disposal are reasonable in the circumstances, the principal reasons for reaching that decision and a summary of the evidence relied upon.


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Author: David Kirk - ACA FABRP
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