The new regulations for pre-packs with connected persons and the impact on secured lenders
30 July 2021
The key points considered in this article are:
- If secured lenders (as connected persons) engage the evaluator as part of the pre-pack planning process prior to the commencement of the administration then the secured lenders will arguably walk away with a more robust and defensible sale without any resulting delay.
- Secured lenders could execute a successful pre-pack sale without becoming connected persons; they may wish to do so to avoid the complexities of obtaining creditor consent or an evaluator’s report.
- It is unclear what the extent of liability attaching to an evaluator could be and what recourse a creditor or the administrator could have to the evaluator; this uncertainty could result in difficulties for a secured lender (as a connected person) when negotiating an appropriate fee arrangement with a potential evaluator.
For further information on the new regulations, see our bulletin here.
This article was initially published in the July/August 2021 edition of Butterworths Journal of International Banking and Financial Law.