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Pre-pack administrations

Published Wednesday, December 13, 2017

This Commons briefing paper explains how pre-pack administrations work in practice under revised SIP 16; the recommendations of the Graham Review; and provides a summary of the measures introduced by the Small Business Enterprise and Employment Act 2015.

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A pre-packaged administration (a pre-pack) is an arrangement under which the sale of all or part of a company’s business or assets is negotiated with a purchaser prior to the appointment of the administrator, and the sale contract executed on the appointment of the administrator or very shortly afterwards.

Following the publication of a Select Committee report in February 2013, the Government announced in July 2013 an independent review of the pre-pack procedure. The Graham Review into Pre-Pack Administration was published in June 2014 alongside “Pre-Pack Empirical Research: Characteristic and Outcome Analysis of Pre-Pack Administration’ by the University of Wolverhampton. In response to the six recommendations made in the Graham report, the Government said it would work with business and industry to implement these recommendations in full.  One of the key recommendations of the Graham report was that a pool of independent experts be set up in order to assess and give an opinion upon a proposed pre-pack sale to a ‘connected party’, but only if requested to do so by the connected party. On 2 November 2015, the Pre-Pack Pool became operational.  

The Small Business Enterprise and Employment Act 2015, which received Royal Assent on 26 March 2015, implemented another Graham recommendation, creating a reserve power for the Secretary of State to legislate if necessary. This wide-ranging Act also introduced a number of measures to amend various parts of the current insolvency framework and modernise insolvency law by removing unnecessary costs and regulatory burdens.  

This Commons briefing paper explains in detail at how pre-pack administrations work in practice under revised SIP 16; the "pros and cons" of the procedure; the recommendations of the Graham Review; and provides a summary of the measures introduced by the Small Business Enterprise and Employment Act 2015. This briefing paper applies to England and Wales, and Scotland.

Commons Briefing papers SN05035

Author: Lorraine Conway

Topic: Insolvency

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