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Draft regulations laid before Parliament - if approved will take effect on 30 April 2021. An administrator cannot effect a "substantial disposal" (which includes a sale of substantially the whole of the assets of the company to a connected person within eight weeks of the administration) unless creditor consent has been given or a qualifying report has been obtained (by the connected person). Of note, the regulations do not preclude the administrator from proceeding if the qualifying report is not supportive (although doubtless few administrators would do this unless there are very special facts justifying such action).
It will be interesting to see how this works out for complex financial restructurings where Part 26 schemes are used in conjunction with pre-pack administrations, often urgently and to connected parties (eg common directors of old co and new co) to resolve out of the money junior creditor and equity interests. Will we see a move towards Part 26A plans which use the "no genuine economic interest" disenfranchisement provisions and/or cram down for dissenting classes, therefore obviating the need for a pre-pack administration?
Of Counsel