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New rules regarding pre pack administration sales announced in parliament

9 October 2020

The government has announced that pre pack sales to connected parties will be scrutinised independently. 

Eleanor Temple, chair of insolvency and restructuring trade body, R3 in Yorkshire and a barrister at Kings Chambers in Leeds said:

“Having agreed that it should be mandatory for sales to connected party purchasers in pre-packs to be referred for an independent opinion, we broadly welcome the Government’s announcement. In particular, the Government’s decision not to ban sales to connected parties in pre-packs is the right one."

The problem with getting a second opinion as to whether connected parties are right and proper to take over the business are many.  Here is the list:

  • Will take time and speed is vital to stop a sudden meltdown of value
  • Who will these independent people be? 
  • If they decide they are not fit what happens next ? - most likely the business will go into liquidation.

Category: Pre Pack Administration Process and Procedures

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