UK connected party pre-pack administration sales rise again

The Annual Review of Insolvency Practitioner Regulation 2024 - GOV.UK has been published and reports a significant increase in the number of pre-packs and connected party pre-packs. 

Rising numbers

Administrators are required to submit Statements of Insolvency Practice 16 (SIP 16) disclosure statements in administrations to explain why a pre-pack sale was in the best interest of creditors.  The monitoring of this data by the Insolvency Service shows that the number of pre-packs has risen from 201 in 2021 to 628 in 2024, an increase of 212%. 

The data reports a similar rise in the number of connected person sales (395 in 2024 as compared to 329 in 2023, 201 in 2022 and 106 in 2021).

This significant increase in the number of pre-pack administration sales is reflected in the government's insolvency statistics - company insolvency numbers in the first five months of 2025 are at a similar level to 2023, which saw a 30-year high annual number of insolvencies. The number of administrations per month has increased from 43 in May 2021 to 136 in May 2025. 

This increase also coincides with the introduction of new regulations for connected party sales, the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the Regulations) (see our Alert here).

Evaluator Reports 

The Regulations require either creditor consent for sales to connected parties or that connected parties obtain an independent opinion in relation to such sales from an 'evaluator' who provides their opinion regarding the reasonableness of the grounds and consideration for the transaction in an Evaluator Report.

One of the main criticisms of the draft Regulations was that the requirements around the qualification of the evaluator were very light. Despite this criticism, the data shows that there was only one connected person sale in 2024 where creditor approval was sought rather than an Evaluator Report, no doubt also reflecting the practical difficulties in obtaining creditor approval in the context of a pre-pack.

The introduction of a Evaluator appears to have been effective in increasing stakeholder confidence in pre-pack sales to connected parties and to have preserved what is generally viewed as a valuable tool for business rescue.

Find out more 

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.