New legislation on pre-pack administrations, R3 response

23 March 2021

Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets, responds to the passing of new legislation on pre-pack administrations: 

“We welcome efforts to improve stakeholder confidence in pre-packs, but it may be proved that this legislation has missed the mark.

“Sales to connected parties in pre-pack administrations will now be subject to creditor approval, or review by the new independent Evaluator position. The rationale for this is clear but the practicalities around ensuring that an Evaluator is a fit and proper person is where these regulations could fall down.

“These regulations effectively leave it to the market to regulate the Evaluator position. A far better alternative would have been for the Government to agree to maintain a list of approved Evaluators. This might have meant an additional administrative burden for them, but it would have given stakeholders greater confidence that these reforms were robust rather than just the easiest option for the Government.”

• An R3 Technical Alert on the new regulations is available to members here.