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‘Pre‐Pack Administration Sale: a Case of Sub Rosa Debt Restructuring’
Author(s) -
Wijaya Anthony
Publication year - 2016
Publication title -
international insolvency review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.125
H-Index - 7
eISSN - 1099-1107
pISSN - 1180-0518
DOI - 10.1002/iir.1248
Subject(s) - restructuring , debt restructuring , creditor , debt , insolvency , business , administration (probate law) , corporation , finance , economics , law , political science , sovereignty , sovereign debt , politics
Under the UK insolvency regime, debt restructuring is ordinarily achievable via a voluntary arrangement, a scheme of arrangement (“scheme”) or a combination of a scheme with administration.[Note 2. Antony Zacaroli QC, Alexander Riddiford, ‘Schemes of arrangement and ...] However, recently, there has been a growing development of companies using pre‐pack administration sale (“pre‐pack sale”) to effect a debt restructuring under the moniker of a sale of the assets of the company. This article argues that this development poses a genuine danger for the creditors and in particular the junior creditors[Note 3. The term “junior creditors” is not used in the ...] because such transactions side‐step the protections afforded to the junior creditors in a debt restructuring, particularly a scheme. This article posits that such pre‐pack sales are essentially a sub rosa debt restructuring.[Note 4. The phrase “sub rosa” is defined as “[c]onfidential; secret; ...] Against this backdrop, this article proposes for the use of an ex ante judicial regulatory strategy through the application of the Re Tea Corporation principle to better protect the interest of the junior creditors.[Note 5. [1904] 1 Ch 12. Hereinafter, the ‘Re Tea Corporation ...] Copyright © 2016 INSOL International and John Wiley & Sons, Ltd. Copyright © 2016 INSOL International and John Wiley & Sons, Ltd