Our summer seminars covered Administration sales and in particular return to the "pre-pack" process and SIP 16. The Pre-Pack Pool has now been launched and is an independent pool of experts who will review the acquisition of a business through a "pre-pack", where the Buyer is connected to the Seller.
The introduction of the pool follows Teresa Graham's 2014 independent review of the pre-pack process. Her review concluded that there is a place for "pre-packs", but stressed the need for more transparency in the process, particularly when a business is sold to a connected party. However, she concluded legislation should be a last resort and instead suggested the introduction of a voluntary pool to consider connected sales.
Applications to the Pre-Pack Pool can be made by directors, shareholders and other connected parties who are looking to acquire the business along with an explanation as to why such a sale to a connected party is the best way to proceed. The pool is optional and its opinions are not binding, but Administrators will no doubt be extremely cautious if the pool is not consulted.
The pool is made up of 20 independent senior business experts who will provide an anonymous response within 48 hours, at a cost of £800 + VAT per application.
There are relatively few pre-packs; in 2014, of 20,000 businesses that went through an insolvency process, less than 5% were pre-packs, but nonetheless negative perceptions about them remain. It is hoped these new measures will go some way to allaying the main concern about transparency in the process.