On 8 October, a news release from the Insolvency Service advised that new laws will require mandatory independent scrutiny of pre-pack administration sales where connected parties are involved in the purchase – such as the insolvent company’s existing directors or shareholders. Pre-pack administrations involve arrangements to sell part or the whole of a company’s business or assets prior to the company entering into administration. The sale is completed on or shortly after the appointment of an administrator and the speed of the transaction helps preserve the value of the business while saving jobs. While pre-pack administration sales are widely considered to be a valuable rescue tool, concerns have been raised that arrangements may not always be in the best interests of creditors. The release explains that the power to regulate connected party sales in administration lapsed in May 2020, but was revived by the Corporate Insolvency and Governance Act 2020, giving the Government powers to introduce regulation via affirmative secondary legislation.
https://www.gov.uk/government/news/pre-pack-sales-to-face-mandatory-independent-scrutiny
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