Page 394 - วารสารกฎหมาย ศาลอุทธรณ์คดีชํานัญพิเศษ

วารสารกฎหมาย ศาลอุทธรณ์คดีชำานัญพิเศษ

primarily in order to ‘rescue the company as a going concern’. The unique feature of
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administration is the comprehensive moratorium. A pre-pack administration is an
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‘arrangement under which the sale of all or part of a company’s business or assets is
negotiated with a purchaser prior to the appointment of an administrator, and the

administrator effects the sale immediately on, or shortly after, his appointment’. The
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courts have confirmed that an administrator can dispose of the assets of the company
without the leave of the court and prior to the approval of his proposals by the company’s

creditors. Even a majority (unsecured) creditor does not have a veto on the
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implementation of the administrator’s proposals. The pre-pack administration serves
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mainly as a mechanism for the transfer of the business from the previous corporate
structure to a new holding company where this cannot (easily) be achieved on the basis
of the underlying facility agreements.

Following sanctioning, the scheme companies will be put through a pre-pack
administration with the administrator transferring their assets – mainly the shares in the

operating companies – to the new holding structure immediately upon appointment,
in exchange for the assumption of trade debt and a discharge of senior debt through the
issuing of new debt and equity by the new group. Junior ‘out of the money’ creditors

will be left behind with the old group structure as an empty shell. They may challenge
the underlying scheme at the sanctioning stage but will not be successful if they cannot

demonstrate that firm value breaks within the junior tranche. The business emerges
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largely unscathed held by a new group with a more sustainable capital structure.

16 Insolvency Act 1986, Sch. B1, para. 3.
17 Ibid., Sch. B1, paras 42–44.
18 Statement of Insolvency Practice (SIP) 16, para. 1.
19 Pre-Enterprise Act 2002: Re T&D Industries plc [2000] 1 WLR 646; post-Enterprise Act 2002: Transbus
International Ltd (in liquidation) [2004] 2 BCLC 550.
20 DKLL Solicitors v. Revenue and Customs Commissioners [2007] BCC 908.
21 Pre-packs have raised concerns over the years: S Frisby, ‘A preliminary analysis of pre-packaged
administrations’, Report to The Association of Business Recovery Professionals (R3, 2007); Graham Review into
Pre-Pack Administration: Report to The Rt Hon Vince Cable MP (June 2014).
22 Re Bluebrook Limited [2010] B.C.C. 209.

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