01 — Substantial Disposals Restricted

An administrator cannot dispose of, hire out, or sell all or a substantial part of a company’s business or assets to a connected person within the first eight weeks of administration — unless one of two conditions is met.

02 — Creditor Approval or Qualifying Report

The disposal may proceed only if creditors have approved it, or a qualifying report has been obtained from an independent evaluator. In most pre-pack scenarios, obtaining a qualifying report will be the practical route forward.

03 — The Role of the Evaluator

The evaluator must be independent, hold sufficient relevant knowledge and experience, and maintain professional indemnity insurance. It is the connected person’s responsibility to instruct the evaluator and provide all necessary information.

04 — Connected Persons Defined

Connected persons include directors, shadow directors, non-employee associates of those directors, non-employee associates of the company, and any company connected with the company in administration — as defined in paragraph 60A(3) of Schedule B1 to the Insolvency Act 1986.

05 — The Qualifying Report

The report must state whether the evaluator is satisfied that the consideration and the grounds for the substantial disposal are reasonable in the circumstances, together with the evaluator’s principal reasons for reaching that view.

Filing & Transparency

The administrator must file the qualifying report at Companies House and share it with creditor alongside their statement of proposals — ensuring full transparency in every connected party transaction.

Not sure whether the Regulations apply to your situation? Get in touch — we’re happy to talk it through at no cost or obligation.