Administration orders “bless” pre-pack information agreements, say Malcolm Dowden & Saira Malik
Legislative policy, embodied in changes made by Insolvency Act 2000 and Enterprise Act 2002, has reduced court involvement in the initiation of insolvency processes. Despite an increase in the number of out-of-court or “self certifying” appointments of administrators, it remains common to apply for an administration order where a “pre-pack” has been agreed as the order “blesses” the arrangement.
In Re Kayley [2009] EWHC 904 (Ch) the court responded to Counsel’s invitation to offer general guidance on pre-pack administrations. The key issue was the type and extent of information required by the court to inform its decision, and the extent to which the court should take an active role in seeking information, rather than leaving disadvantaged creditors to incur the cost and uncertainty of challenge following subsequent disclosure.
The judge acknowledged concerns relating to pre-packs:
A pre-packaged business has not been exposed to the market, which may lead to it being disposed of for less than would have been
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