Legislative change for connected party pre packs and Statement of Insolvency Practice 16
Changes will need to be made to Statement of Insolvency Practice 16 with limited advance notice due to new legislation.
In October 2020, the government published its plans to reform the law around pre pack administrations and announced that it would bring forward legislation which would place certain conditions on connected person sales in administration.
The draft regulations which will make these changes the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 have now been laid in Parliament, with a commencement date of 30 April 2021. As the regulations will introduce a requirement for a connected party purchaser to obtain a report from an independent and suitably qualified person before a pre pack can be undertaken, changes will need to be made to statement of insolvency practice 16 – pre-packaged sales in administrations (SIP 16) to align the content of the SIP with the new law. This will need to happen quickly. At this stage, as the regulations have just been published, all we are able to do is alert insolvency practitioners to the fact that there will be changes SIP 16, and that these changes will have to be made with limited advance notice.