Under English law a pre-pack sale of assets by administrators should be considered to be a "sale implemented under a court approved process."
The company was put into administration by an order of the court, and an order was made granting the administrators liberty to enter into an immediate pre-pack sale of all of the company's assets.
In order to complete the sale, the administrators sought release of assets from security. The security agent under the relevant finance documents was permitted to release the assets from the security if (amongst other requirements) the sale was "implemented under any court approved process". The court was asked to decide, inter alia, whether the sale fell within that remit.
Even though the decision to enter into the sale was ultimately taken by the administrators, the pre-pack sale of assets was implemented under a court approved process, because:
- The administrators had been appointed by an order of the court;
- The administrators are officers of the court and are potentially subject to the control and supervision of the court; and
- When making the administration order, the court was well aware of the proposed sale.
Even if that is wrong, the court was satisfied that the sale would be a proper exercise of the administrators' powers, and therefore express permission to enter into the sale was granted by the court, meaning that the sale was a "court approved process".