The UK Government has announced its intention to conduct an assessment of the impact of the voluntary industry measures introduced in November 2015 to improve the transparency of connected party pre-pack sales in administration.
The industry measures arose from the recommendations of the 2014 independent Graham Review, which found that pre-pack sales were a useful business rescue tool, but that there was evidence of less successful outcomes where the pre-pack sale was to a connected party.
The assessment will look at the impact of reforms on all connected party sales in administration and help to inform decisions on whether further regulation is needed prior to the expiration of the regulation making power.
Commenting on the announcement, Duncan Swift, deputy vice president at insolvency and restructuring trade body R3 said:
“The Government’s review is expected and is a good opportunity to examine the role pre-pack administrations play in the UK’s business rescue landscape.
“At the end of this review, the Government must decide whether or not to exercise its power to ban any sales from any administration – not just pre-packs – to a connected party. This power expires in 2020. The insolvency and restructuring profession understands the frustrations that exist with pre-packs, but to lose the ability to make a sale to a connected party would have a serious impact on business rescue in the UK. However, this does not mean there is no room for continued improvement on pre-packs.”
Pre-Pack Administration Advice Glasgow, Edinburgh and London
We understand that facing up to financial challenges can be an extremely difficult and stressful time. However, you should be reassured to know that there are options available and, with the right advice and support, you can take the necessary steps to improve your situation. For further information on pre-pack administration at an office near you, please contact us today.
Contains public sector information licensed under the Open Government Licence v3.0.