1. Administration proceedings
Information for insolvency practitioners
This section contains content published after 1 January 2020. Articles published before this date can be found on the National Archives here
The power to regulate connected party sales in administration was introduced by the Small Business, Enterprise Employment Act 2015 and revived by the Corporate Insolvency and Governance Act 2020. The Government proposes to exercise the power to require mandatory independent scrutiny of connected person sales, unless there has been creditor approval of the transaction.
Government sought views from stakeholders to produce draft regulations which have been published alongside a report announcing the outcome of the Insolvency Service’s review into the impact of voluntary measures introduced in November 2015 following the 2014 review by Teresa Graham Graham Review into Pre-Pack Administration, to improve transparency and confidence in pre-pack sales in administration.
Regulations will be made as soon as Parliamentary time allows. The Government also proposes to work with industry on non-legislative reforms to strengthen the existing professional standards around pre-packs.
The full report on the outcome of the Insolvency Service review and the draft regulations can be found here:
https://www.gov.uk/government/publications/pre-pack-sales-in-administration
If insolvency practitioners wish to make any comments on the draft regulations, please e-mail these to Pre-pack.review@insolvency.gov.uk before 5 November 2020.
Enquiries regarding this article may be sent to: Policy.Unit@insolvency.gov.uk.
Further to issue No. 111 of Dear IP, which announced the Government’s intention to regulate connected party sales in administrations, draft regulations entitled “The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021” were laid in Parliament on 24 February 2021. The regulations propose mandatory independent scrutiny of connected person sales, where the administrator considers the sale to be all or a substantial part of a company’s business or assets, unless creditor approval of the sale has been obtained.
The regulations are subject to the draft affirmative procedure and will therefore be debated in both Houses of Parliament. A link to the draft regulations on legislation.gov.uk can be found here:
https://www.legislation.gov.uk/ukdsi/2021/9780348220421/regulation/1
Any enquiries regarding this article should be directed towards email: Policy.Unit@insolvency.gov.uk