A regime hits its statutory review point

On 30 April 2026 the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 — SI 2021/427 — passed their fifth anniversary in force. They are the rules that, since 30 April 2021, have required an administrator proposing to sell a substantial part of an insolvent company to a connected party within eight weeks of appointment either to commission a qualifying report from an independent evaluator or to obtain creditor consent.

Five years was not a casual number. Regulation 12 of SI 2021/427 obliged the Secretary of State to carry out and publish a review of the Regulations at intervals not exceeding five years. The first such review is therefore now due. With it comes the question that hung over the regime when it was introduced: did mandatory evaluator scrutiny actually change the connected-party pre-pack market, or did it just re-paper a process the market had already learned to live with?

This piece looks at what the register data, the Insolvency Service statistics and the rapid drift of the Pre-Pack Pool out of the picture suggest about the answer.

What pre-pack actually means in the schedule

A pre-pack administration, in the colloquial sense, is one in which the sale of the business and assets has been negotiated before the administrator's appointment under Schedule B1 of the Insolvency Act 1986 and is completed shortly afterwards — often on the day of appointment. The term has no statutory definition; the relevant statutory hook for SI 2021/427 is paragraph 60A of Schedule B1, inserted by section 129 of the Small Business, Enterprise and Employment Act 2015 (SBEEA 2015).

Section 129 of SBEEA 2015 was Parliament's reaction to the 2014 Graham Review of pre-packs, which had concluded that the sub-set most needing scrutiny was the sale of an insolvent business to its existing directors, shareholders or otherwise connected persons. The section contained a regulation-making power, but with a sunset clause — originally May 2020. By 2020 the Government had not acted; the sunset was extended by the Corporate Insolvency and Governance Act 2020 to 25 May 2025; and SI 2021/427 was finally laid in 2021, in the last quarter of the extended period. The regime was, in other words, made under a power that very nearly lapsed without being used.

What SI 2021/427 requires

The Regulations are short — a dozen substantive provisions — but they bite at the most controversial point in any pre-pack: the moment value transfers to a party with an existing relationship to the failing company.

A connected person is defined by reference to sections 249 and 435 of the Insolvency Act 1986. Where an administrator proposes to make a substantial disposal of the company's property to a connected person within eight weeks of the date of administration, one of two things must happen before that disposal:

1. An independent evaluator must provide a qualifying report stating whether, in their view, the consideration to be paid is reasonable and the grounds for the disposal are reasonable; or
2. Creditor approval must be obtained.

The evaluator must be a qualifying person — broadly, someone professionally insured, sufficiently experienced and lacking a conflict of interest. No central register of evaluators is maintained; selection is on a case-by-case basis. The qualifying report is filed alongside the administrator's proposals and so is visible to creditors and third parties consulting the Companies House record.

The regime against the voluntary baseline

Before 30 April 2021, the architecture of scrutiny rested on three pillars: Statement of Insolvency Practice 16 (issued by the recognised professional bodies), the Pre-Pack Pool (a voluntary independent review body set up after the Graham Review in 2015) and the administrator's general duty under Schedule B1.

The most important shift is in the second-to-last row. The Pool's three-tier opinion language — including the limited information verdict that effectively meant the Pool could not opine — was an inherited compromise from a voluntary body that could only review what was put in front of it. The evaluator regime is binary, and the binary is recorded on the Companies House file.

What the data has shown

Annual figures from the Insolvency Service show administrations in England and Wales in the low thousands per year during the relevant period: 1,266 in 2021, 1,758 in 2022, 1,553 in 2023 and a comparable order of magnitude in 2024. Pre-packs typically account for around a third of administrations, and connected-party sales for roughly a quarter of pre-packs — meaning the compulsory scope of SI 2021/427 has been biting on the order of 100–200 cases per year.

The eight-week window has shaped practitioner behaviour as much as the report requirement itself. A connected-party disposal completed in week nine sits outside the regime; that has unsurprisingly produced occasional cases that complete just outside the window, and a small body of practitioner commentary debating whether the cut-off is too short or simply easy to game.

Three patterns are worth flagging from the published evaluator reports on the register:

• Evaluator concentration. A small number of corporate-finance and accountancy firms now supply the bulk of qualifying reports. The case-by-case structure of the regime has not produced a wide pool of evaluators; it has produced a quiet specialism.
• Almost universal reasonable verdicts. Public-domain review of qualifying reports has found that the overwhelming majority — well above 90% — conclude the consideration is reasonable. Critics treat this as evidence the regime is structurally biased toward sign-off; defenders argue it reflects the fact that administrators self-screen and refer borderline cases to creditor approval instead.
• Short qualifying reports. Reports of two to four pages are common. The Regulations do not prescribe a minimum length or content level beyond stating whether the consideration is reasonable.

The quiet exit of the Pre-Pack Pool

The Pool was not formally part of SI 2021/427. The Regulations are evaluator-based, not Pool-based; the Pool's role was preserved only as a possible evaluator route. In practice, referral volumes to the Pool fell sharply after April 2021 — practitioners chose firms they already used. By 2023, public reporting indicated the Pool was no longer actively reviewing cases. A voluntary body that had operated for six years was, in effect, displaced by the regime intended to formalise its function.

This is the most striking five-year outcome the statutory review will have to address: the regime has worked at the level of mandatory paperwork, but the institutional infrastructure that originally embodied the principle of independent scrutiny is no longer in service.

Five questions the Regulation 12 review should answer

The statutory review under Regulation 12 has no prescribed form. In our view, an honest review needs to engage with five questions:

1. Concentration of evaluators. How many distinct evaluator firms have provided qualifying reports? Has supply diversified or thickened?
2. Verdict distribution. What share of qualifying reports have concluded that the consideration is reasonable? Where they have not, what happened next?
3. The substitution effect. How often has the alternative — creditor approval — actually been used in place of an evaluator report? An over-reliance on the evaluator route would suggest creditors are not engaging.
4. Post-sale company survival. Of connected-party purchasers in the 2021–2024 cohort, how many entities are still trading at the five-year mark? Companies House data underpins this — and is the clearest test of whether the regime is selecting viable continuations from value extractions.
5. Evaluator regulation. Should there be a register, a code of conduct, or minimum content requirements for qualifying reports? The case-by-case design has not produced visible market discipline.

Bottom line

SI 2021/427 has done the modest, mechanical thing it set out to do: it has put a piece of paper on the file for almost every connected-party pre-pack since April 2021. It has not, on the evidence to date, materially changed which connected-party sales happen or on what terms; nor has it produced a transparent, plural marketplace of evaluators. The Pre-Pack Pool — the voluntary institution that gave the regime its political legitimacy — has effectively been retired by it.

The fairer test of the regime is not whether reports are filed but what the register shows the connected purchasers doing two, three, five years later. Companies House holds the record. The Regulation 12 review will be a missed opportunity if it does not use it.