Friday 26 February 2021

UK: Administration - pre-pack sales to connected parties - draft legislation before Parliament

A draft of the secondary legislation - The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 - that will introduce mandatory, independent scrutiny for certain pre-pack administration sales, is currently before Parliament. The (draft) explanatory memorandum, available here (pdf), states (para. 6.1): 
This instrument imposes conditions that must be satisfied before an administrator of a company in administration is able to make a substantial disposal of company property to a person who has a connection with the company. The conditions are that the company’s creditors must have considered and approved the proposed disposal, or, alternatively, that an independent and suitably-qualified person has provided a report to the administrator which considers whether the proposed disposal is reasonable in the circumstances. The instrument also requires that, if the report concludes that the proposed disposal is not reasonable, this must be disclosed to the company’s creditors".

The Regulations are subject to the draft affirmative procedure and their progress can be followed here

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