Pre-packaged sales are often used as a rapid and discreet method to rescue a company, providing business continuity and preserving value. After years of heavy criticism due to the lack of transparency associated with such sales, the approach to pre-packaged sales will be amended by virtue of the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the "Regulations"). The Regulations come into force on 30 April 2021. The Regulations require that creditor approval or a report provided by an independent evaluator be obtained before an administrator may make a substantial disposal of a company's assets to a connected person within eight weeks of the start of an administration. It remains to be seen whether the implementation of the Regulations will, in fact, improve the transparency of the often criticised pre-packaged sales and ensure that such transactions are fair and appropriate.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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