Do You Need an Evaluator Report for a Pre-Pack Administration?
If you are looking to buy back a business or its assets from administration, you may have been told that you need an Evaluator Report before the sale can complete.
For many directors and connected purchasers, this requirement appears at an already pressured point in the transaction. The business may be in difficulty, the administrator may be moving quickly, and there may be employees, customers, suppliers and funders waiting for clarity.
The good news is that the process can be straightforward when it is handled early and properly.
At Admin Eval, we specialise in providing independent Evaluator Reports for connected-party sales in administration. Our role is to help you understand what is required, gather the right information, and move the process forward quickly and compliantly.
The quick answer
You are likely to need an Evaluator Report where all of the following apply:
The proposed purchaser is connected to the company.
The sale involves all or a substantial part of the company’s business or assets.
The sale is taking place within the first eight weeks of administration.
The administrator is not seeking creditor approval before completion.
Where these conditions apply, the administrator cannot complete the sale unless either creditor approval is obtained or a qualifying Evaluator Report is provided and considered.
In most urgent pre-pack or connected-party administration sales, an Evaluator Report is usually the more practical route.
For more detail on how the process works, see our Evaluator Report services page.
What is an Evaluator Report?
An Evaluator Report is an independent written report prepared under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, often referred to as ARR 2021.
The purpose of the report is to provide independent scrutiny of a proposed sale of a company’s business or assets to a connected person shortly after the company enters administration.
The report does not approve the sale in the same way a court order or creditor vote might. Instead, it gives an independent opinion on whether the evaluator is satisfied that:
the consideration to be provided for the sale is reasonable; and
the grounds for the disposal are reasonable.
The administrator must consider the report before completing the sale. The final decision remains with the administrator, but the report is an important part of the statutory process.
You can also read more about our approach on our About Admin Eval page.
Why do Evaluator Reports exist?
Evaluator Reports were introduced to increase transparency around connected-party sales in administration, particularly pre-pack sales.
A pre-pack sale can often preserve value, protect jobs and allow a business to continue trading. However, where the buyer is connected to the insolvent company, creditors may understandably want reassurance that the transaction has been properly scrutinised.
The Evaluator Report process is designed to provide that scrutiny without necessarily delaying a transaction that may need to move quickly.
When is an Evaluator Report required?
An Evaluator Report is usually required where there is a proposed substantial disposal by an administrator to a connected person within the first eight weeks of the administration.
There are three key parts to that test.
1. Is the purchaser connected to the company?
The first question is whether the proposed purchaser is connected to the company in administration.
In practical terms, this often includes situations where the purchaser is:
a director of the company;
a former director or shadow director;
a company controlled by the same directors or shareholders;
a new company set up by existing management;
a party otherwise connected with the company or its management.
This is a common feature of pre-pack administration sales, where directors or existing management wish to buy the business or assets and continue trading through a new company.
If there is any uncertainty about whether the purchaser is connected, it is sensible to raise this early with the proposed administrator or adviser. You can also contact Admin Eval for an initial discussion.
2. Is the sale substantial?
The second question is whether the proposed sale involves all or a substantial part of the company’s business or assets.
This does not simply mean looking at one asset in isolation. The overall commercial effect of the transaction needs to be considered.
Relevant factors may include:
the value of the assets being sold;
whether goodwill is included;
whether the trading business is being transferred;
whether key contracts, stock, plant, machinery or intellectual property are being sold;
whether employees are transferring;
whether the sale effectively represents the continuation of the business.
In many pre-pack sales, the transaction will involve a substantial part of the company’s business or assets. Where that is the case, and the purchaser is connected, the Evaluator Report requirement should be considered at an early stage.
3. Is the sale within the first eight weeks of administration?
The third question is timing.
The ARR 2021 restrictions apply to substantial disposals to connected persons during the first eight weeks of administration.
That timing is important because many pre-pack sales are completed either immediately on appointment or shortly afterwards. In those cases, there may be very little time between the administrator’s appointment and completion of the sale.
That is why the Evaluator Report process often needs to begin before the administration appointment is made, so that the report can be prepared in time and the sale can proceed without unnecessary delay.
For more information on likely timing, see our FAQs.
Who obtains the Evaluator Report?
The Evaluator Report is obtained by the connected purchaser, not by the administrator.
In practice, this means the proposed buyer will instruct the evaluator directly, usually after a recommendation from their solicitor or the administrator. The purchaser (and their agents) will then need to provide the evaluator with the information required to complete the report.
The administrator can be consulted on the suitability of the evaluator, and the administrator must ultimately be satisfied that the evaluator has the necessary knowledge and experience.
At Admin Eval, we are used to working quickly with directors, purchasers, solicitors, accountants and insolvency practitioners to make sure the process is clear and properly coordinated. You can read more about our experience on our Evaluators page.
What information is needed for an Evaluator Report?
The information required will depend on the transaction, but it will usually include details of:
the company entering administration;
the proposed purchaser;
the connection between the purchaser and the company;
the business or assets being sold;
the proposed purchase price and payment terms;
asset valuations or other evidence supporting the consideration;
the background to the company’s financial difficulties;
the reasons for the proposed sale;
the anticipated outcome for creditors;
any marketing or alternative sale process;
any previous Evaluator Report obtained in relation to the proposed disposal.
Many purchasers worry that the information requirement will be difficult or burdensome. In most cases, the information already exists within the sale process, the administrator’s files, the purchaser’s offer documents, valuation reports, financial information or correspondence with advisers.
Our role is to help identify what is needed, explain why it is needed, and work through the information in a practical way.
For a fuller explanation of how we guide purchasers through the process, see our services page.
How long does an Evaluator Report take?
At Admin Eval, reports are typically produced within 48 hours of receiving the required information.
Where the matter is particularly urgent, we will always try to work to the transaction timetable. The key is early engagement. The sooner the evaluator is involved, the easier it is to identify what is needed and avoid delay later.
A well-prepared purchaser and adviser team can make the process much smoother.
If you have an urgent transaction, please contact us as early as possible.
What does the evaluator consider?
The evaluator does not simply tick a box. The report must include independent analysis of the proposed sale.
The evaluator will usually consider:
the nature of the business or assets being sold;
the proposed consideration;
valuation evidence;
the circumstances leading to the proposed administration;
the reasons why the sale is being proposed;
the connection between the purchaser and the company;
whether the transaction appears commercially reasonable;
whether the proposed disposal is justified in the circumstances;
any previous reports or relevant concerns.
The evaluator’s role is not to act as the purchaser’s adviser, the administrator, or the creditors’ representative. The role is to provide an independent opinion based on the information available.
You can read more about Admin Eval’s specialist role on our About page.
What conclusion does the Evaluator Report reach?
The report will include one of two conclusions.
The evaluator will state either that they are satisfied that the consideration and grounds for the disposal are reasonable, or that they are not satisfied.
Where the evaluator is satisfied, the report can assist the administrator in progressing the transaction.
Where the evaluator is not satisfied, the administrator may still technically proceed, but they must consider the report and explain why they are proceeding despite the evaluator’s conclusion.
For that reason, it is important that the process is handled carefully and that the evaluator receives clear, complete and accurate information.
Our FAQs answer some of the common questions about the administrator’s role and the effect of the report.
What if there has already been a previous Evaluator Report?
If a previous Evaluator Report has been obtained in relation to the proposed sale, this needs to be addressed.
The purpose of this requirement is to avoid “opinion shopping”, where a connected purchaser seeks more than one report in the hope of obtaining a more favourable view.
If there has been a previous report, the evaluator may need to consider it and address it in the new report. If the purchaser says there has been no previous report, that may also need to be stated.
This is an area where early transparency is important. If there has been any previous report, draft report, adverse indication or related evaluator involvement, it is better to raise it at the outset.
If this applies to your transaction, you can speak to Admin Eval before formally instructing us.
Is the administrator bound by the Evaluator Report?
No. The administrator is not bound by the evaluator’s conclusion.
However, the administrator must consider the report before completing the sale. If the evaluator is not satisfied and the administrator still decides to proceed, the administrator will need to explain why.
In practical terms, this means the report matters. It is part of the statutory framework and part of the record of how the proposed sale was scrutinised.
Can creditor approval be used instead?
Yes. The alternative to an Evaluator Report is creditor approval.
However, in many urgent pre-pack or connected-party sale situations, waiting for creditor approval may not be commercially realistic. The business may need to be sold quickly to preserve value, protect goodwill, retain employees, or maintain customer and supplier confidence.
That is why an Evaluator Report is often the more practical route.
Common situations where an Evaluator Report may be needed
You may need an Evaluator Report where:
existing directors are buying the business through a new company;
management is purchasing the business or assets from the administrator;
a connected company is acquiring goodwill, stock, plant, machinery or contracts;
the sale is being completed immediately following the administrator’s appointment;
the transaction is intended to preserve the business as a going concern;
the administrator has advised that ARR 2021 applies.
If you are unsure, it is usually worth checking early. A short initial discussion can often confirm whether a report is likely to be required.
You can contact us here to discuss the proposed transaction.
How Admin Eval helps
Admin Eval provides independent Evaluator Reports for connected-party sales in administration.
We work with directors, connected purchasers, solicitors, accountants and insolvency practitioners to make the process clear, quick and practical.
Our service includes:
an initial discussion to understand the proposed sale;
clear guidance on the information required;
transparent fixed-fee pricing based on the scope of the matter;
direct communication with advisers where appropriate;
preparation of the Evaluator Report;
practical handling of queries from the administrator or their advisers.
We understand that these transactions are often urgent. Our role is to provide independent scrutiny while helping the process move forward without unnecessary delay.
You can learn more about our process on our Evaluator Report services page, or read more about our team on the Evaluators page.
Need an Evaluator Report?
If you are involved in a proposed connected-party sale in administration, or you are unsure whether an Evaluator Report is required, we can help you understand the next steps quickly.
Contact Admin Eval for an initial discussion.
Email: enquiries@admineval.co.ukTelephone: 07824 348338
FAQs
Do you always need an Evaluator Report in administration?
No. An Evaluator Report is usually only required where there is a substantial disposal to a connected person within the first eight weeks of administration, and creditor approval is not being obtained before completion.
You can read more common questions on our FAQs page.
Who pays for the Evaluator Report?
The report is obtained by the connected purchaser. In practice, the purchaser will usually be responsible for instructing and paying the evaluator.
Can the report be prepared before administration?
The process can often begin before the administration appointment, particularly where the timetable is urgent. This allows the evaluator to review information and identify any gaps early.
What happens if information is missing?
Missing information does not always stop the process, but it may delay the report or affect the evaluator’s ability to reach a conclusion. Early engagement helps identify what is needed.
How quickly can Admin Eval produce a report?
We typically produce reports within 48 hours of receiving all required information. Where the matter is urgent, we will work with you and your advisers to meet the transaction timetable wherever possible.
For urgent matters, please contact Admin Eval.
