The Insolvency Service has announced that the UK government is planning 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 2014 Graham Review found that pre-pack sales were a useful business rescue tool but noted that there was evidence of less successful outcomes where the pre-pack sale was to a connected party.
In addition to the voluntary industry measures, the Small Business, Enterprise and Employment Act 2015 also created a power for the government to impose conditions on property sales to connected parties in Administration (including via a pre-pack). This power expires in May 2020.
The government assessment will look at the impact of both the legislation and voluntary reforms on all connected party sales in Administration. The review will help to inform decisions on whether further regulation is needed prior to the expiration of the regulation making power.
Duncan Swift, deputy vice president at insolvency and restructuring trade body R3, said the review provided "a good opportunity to examine the role pre-pack Administrations play in the UK’s business rescue landscape" in the run up to the 2020 deadline.