From the Graham Report to Compulsory Independent Evaluator’s Report in all connected party pre-packs
Teresa Graham CBE was initially asked to report into the pre-pack administration procedure and make recommendations for reform by the Secretary of State for Business Innovation & Skills as part of the Government’s broader ‘Transparency and Trust’ agenda.
The Graham report was issued in June 2014 and considered the total economic impact of the process and made six recommendations for reform, one of which was for the creation of the Pre-Pack Pool. Referrals to the Pre Pack Pool (from November 2015) were voluntary.
Because of the low take-up on a voluntary basis, the Government has now legislated to make it compulsory to have an independent Evaluator’s report in all connected party pre-packs.
From 30 April 2021, an administrator is now not able to complete a sale, hire out or dispose of all or a substantial part of a company’s assets to a connected party within eight weeks of a company entering into administration without obtaining either the approval of creditors or an Evaluator’s independent written report.
The report must be provided by an independent person (the Evaluator) to the purchaser (the connected party). The Evaluator must state whether he is satisfied that the consideration to be provided and the grounds for the substantial disposal are reasonable in the circumstances.
This new mandatory approach heralds the move away from the previous system of giving the connected party purchaser the option of seeking a report from the Pre-Pack Pool. Compass Evaluator Reports are here to guide you through the process.