Court — ‘blessing’ of pre-packs
If administrators can show the merits of a pre-pack sale of a company’s business, the courts are likely to give the administrators liberty to enter into the pre-pack.
In the recent case of an insolvent law firm, the court was satisfied that the planned sale was the only way forward. The court used the following test, laid down in a 2009 case: the next best offer was projected to realise a lesser sum for the general estate; and the evidence showed the collection of book debts during an administration was likely to realise a lesser sum for the general estate, particularly in circumstances where the Solicitors’ Regulation Authority would be likely to intervene without the pre-packaged sale.
In that case, the prospective administrators asked the court for liberty to enter the sale. The buyer insisted the administrators use part of the purchase price to repay partnership practice loans taken by partners to fund capital investments in the firm. The money would otherwise have formed part of the general estate for distribution to the firm’s creditors in the usual way. The court made an administration order and gave the administrators liberty to enter into the pre-packaged sale…
Click on the link below to read the rest of the Gateley briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Gateley
News from The Lawyer
Briefings from Gateley
If a name is included on the form and the individual does not have a genuine conflict of interest the decision could be unenforceable.
Tracksuits on, as judge grants review of status that could see bridge organisation reclaim VAT on entry fees.
Analysis from The Lawyer
The Law Society recently published guidance to assist solicitors draw up Shariah-compliant wills, causing outrage in some quarters. Gateley’s Haroon Rashid explains the facts.