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Update on Pre-Packs

In an announcement which will be welcome by the insolvency profession DBIS has said that it does not intend to legislate to impose restrictions on the use of pre-pack sales in any insolvency procedure. The Government will commission a review of the existing regime (including SIP16) to encourage transparency in prepacks.

In a High Court judgment (Maltby Holdings Limited v Spratt [2012] EWHC 4 (CH)). the High Court refused to order Administrators to disclose certain valuations which they had obtained in preparation for completion on a pre-pack sale of the Company’s business. The application had been brought by an unsecured creditor intending to bring a claim that the sale had been at an undervalue. The Court decided that disclosure was not necessary to enable the creditor to bring his claim nor would it save costs or assist in achieving an early resolution of the claim.

High Court refuses to make personal adverse costs award.

In Wright Hassall LLP v Morris HHJ David Cooke refused an application by Solicitors to order an Administrator, for whom they had acted in litigation against third parties, to be personally liable for the Solicitors costs. He confirmed that in entering into a contractual arrangement (here, a CFA) the Administrator acted as agent of the Company (Wright Hassall LLP v Morris [2012] EWHC 188 (CH)).