Pre-packs Repacked In Attempt To Provide Transparency

Yesterday (8 October 2020) the Government published the results of its review into pre-pack administrations and has made some interesting (but perhaps unwelcomed) indications as to how legislation surrounding pre-packs will shortly be reformed.  It has also published draft regulations to give effect to its announcement.

The timing of the Government's announcement is not coincidental - the industry is already seeing an increase in insolvencies (and pre-packs) as a result of the economic uncertainty arising from the COVID-19 pandemic.

Pre-packs are an important (but somewhat controversial) tool in the rescue of businesses.    The fact that the sale is already a "done deal" by the time the company enters administration, means that creditors have no say in the sale and are almost always only informed that it has taken place after the event.  The purpose behind the reforms is to bring transparency to pre-pack sales to connected parties which have always been a source