Following the introduction of the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 on 30 April 2021, the Insolvency Service has issued guidance about the requirement for independent scrutiny of connected party disposals of company assets in an administration.
The regulations introduced the role of the evaluator.
The regulations prohibit an administrator from making a substantial disposal to a connected person within the first eight weeks of administration unless they either:
- obtain approval of the transaction from creditors or
- have received and considered a report obtained by the connected person from an evaluator on the reasonableness of the proposed disposal.
The Insolvency Service guidance specifically considers the role of the evaluator; and outlines the criteria for someone taking on this role. It also outlines the information the evaluator is likely to need, and also what the evaluator’s report must contain.
This is essential reading for all insolvency practitioners who take administration appointments, as well as anyone considering acting as an evaluator.