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Tighter rules introduced for pre-pack administrations HMRC is taking a tougher line on ‘phoenix’ businesses
New legislation came into force at the end of April 2021 for pre-pack administrations. It imposes a new eight-week window in which the assets of an insolvent business cannot be sold to a connected party without the consent of creditors, or a report from an independent evaluator. This report, which will be prepared by an
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evaluator selected by the purchaser, will be made available to the creditors. Whilst the administrators are not bound by the report’s recommendations, they will have to justify their actions to the creditors if they decide not to follow the recommendations. Pre-pack sales can be a valuable restructuring option for businesses weighed down by debt,
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which could otherwise be viable through a restructure but are not capable of continuing to trade whilst the administrator markets the business for sale. In these circumstances a quick sale is required to protect the business and employment, as otherwise the assets tend to realise only low values.
Impact on directors
These new rules will impact directors looking to restructure their businesses through a pre-pack and will seek to ensure they make the correct insolvency decisions. Until now, a purchaser had
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Tue 13 July 1400 Videoconference Thu 22 July 1400 Videoconference
BIFA Contact Mike Jones
m.jones@
bifa.org Mike Jones
m.jones@
bifa.org
BIFA Young Forwarders’ Network Details of forthcoming events for the BIFA Young Forwarders’ Network can be found at
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July 2021
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