What Is an Evaluator Report Under ARR 2021?
If you are involved in a proposed sale of a business or assets from administration to a connected person, you may have been told that an Evaluator Report is required.
For many directors and connected purchasers, this can be unfamiliar territory. The term itself sounds technical, and the requirement often arises at a time when the transaction is moving quickly.
This article explains, in plain English, what an Evaluator Report is, why it may be needed, who obtains it, and how the process works.
At Admin Eval, we specialise exclusively in providing independent Evaluator Reports for connected-party sales in administration. Our role is to help connected purchasers and their advisers move through the process clearly, quickly and compliantly.
The quick answer
An Evaluator Report is an independent written report required under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, commonly known as ARR 2021.
It is usually needed where an administrator proposes to sell all or a substantial part of a company’s business or assets to a connected person within the first eight weeks of administration, unless creditor approval is obtained instead.
The report gives an independent opinion on whether the evaluator is satisfied that:
the consideration being paid for the business or assets is reasonable; and
the grounds for the proposed sale are reasonable.
The administrator must consider the report before completing the sale.
For a fuller explanation of when a report may be required, read our guide: Do You Need an Evaluator Report for a Pre-Pack Administration?
Why was the Evaluator Report requirement introduced?
Evaluator Reports were introduced to bring independent scrutiny to connected-party sales in administration.
A sale to a connected person is not automatically wrong. In many cases, it may be the best available way to preserve value, protect jobs and allow the business to continue trading.
However, where the purchaser is connected to the insolvent company, creditors may have concerns about whether the sale has been properly tested and whether the price is reasonable.
The Evaluator Report process is designed to address those concerns by requiring an independent person to review the proposed disposal and provide a written opinion before the sale completes.
What does ARR 2021 mean?
ARR 2021 refers to the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021.
These regulations restrict certain disposals by administrators to connected persons during the first eight weeks of administration.
In simple terms, where the regulations apply, an administrator cannot complete a substantial disposal to a connected person unless either:
creditor approval has been obtained; or
a qualifying Evaluator Report has been provided and considered.
In urgent pre-pack and connected-party sale situations, an Evaluator Report is often the more practical route because waiting for creditor approval may not fit the transaction timetable.
You can learn more about how Admin Eval helps with this process on our Evaluator Report services page.
What is the purpose of an Evaluator Report?
The purpose of an Evaluator Report is to provide independent scrutiny of the proposed sale.
The evaluator considers the information provided and gives an opinion on whether they are satisfied that the proposed consideration and the grounds for the disposal are reasonable.
This is not the same as approving the sale. The administrator remains responsible for deciding whether to proceed.
The report is, however, an important part of the statutory process. It helps demonstrate that the proposed connected-party sale has been independently reviewed before completion.
Who needs an Evaluator Report?
An Evaluator Report may be needed where all of the following apply:
A company is entering, or has entered, administration.
There is a proposed sale of all or a substantial part of the company’s business or assets.
The proposed purchaser is connected to the company.
The sale is taking place within the first eight weeks of administration.
The administrator is not seeking creditor approval before the sale completes.
This often applies in pre-pack administration sales where the existing directors, shareholders or management team are buying the business or assets through a new company.
If you are unsure whether the requirement applies, you can contact Admin Eval for an initial discussion.
Who is a connected person?
A connected person may include a director, former director, shadow director, company controlled by the same directors or shareholders, or another person or entity connected with the company.
In practice, many connected-party sales involve:
existing directors buying the business through a new company;
management teams acquiring the trade and assets;
group companies purchasing assets from the company in administration;
shareholders or associated parties making an offer for the business.
Whether a person is connected can sometimes be straightforward, but not always. If there is any doubt, it should be raised early with the proposed administrator or professional advisers.
Who obtains the Evaluator Report?
The Evaluator Report is obtained by the connected purchaser.
This is an important point. The administrator does not usually instruct the evaluator. The connected person who wishes to buy the business or assets is responsible for obtaining the report and providing the information needed to complete it.
The administrator can be consulted on the suitability of the proposed evaluator, and the administrator must be satisfied that the evaluator has sufficient knowledge and experience to prepare the report.
At Admin Eval, we work with connected purchasers, solicitors, accountants, insolvency practitioners and other advisers to keep the process clear and coordinated.
You can read more about our experience on our Evaluators page.
What does the evaluator look at?
The evaluator will review the proposed sale and the information provided in support of it.
This will usually include:
details of the company entering administration;
details of the proposed purchaser;
the connection between the purchaser and the company;
the assets or business being acquired;
the proposed purchase price;
valuation evidence;
the background to the company’s financial position;
the reasons for the proposed sale;
whether there has been any marketing or alternative sale process;
the likely effect on creditors;
any previous Evaluator Report obtained in relation to the proposed disposal.
The evaluator’s role is to form an independent view based on the information available.
The process is not intended to create unnecessary delay. With the right information, it can usually be dealt with efficiently and practically.
What information will the purchaser need to provide?
The connected purchaser should expect to provide information about the company, the proposed sale and the purchaser’s connection to the company.
This may include company details, financial information, valuation reports, offer terms, asset schedules, background information and details of any previous reports.
In many cases, much of this information already exists because it has been prepared for the proposed administrator, the purchaser’s solicitor, the accountant, or the sale process itself.
Admin Eval helps identify what is needed at the outset so that the report can be prepared without unnecessary back-and-forth.
For more detail on what is usually required, see our Evaluator Report services page.
What conclusion does an Evaluator Report give?
An Evaluator Report will include one of two conclusions.
The evaluator will state either that they are satisfied that the consideration and grounds for the proposed disposal are reasonable, or that they are not satisfied.
If the evaluator is satisfied, the report can assist the administrator in progressing the sale.
If the evaluator is not satisfied, the administrator may still decide to proceed, but they must consider the report and explain why they are proceeding despite the evaluator’s conclusion.
This is why it is important that the evaluator receives clear, accurate and complete information.
Does the Evaluator Report approve the sale?
No. The Evaluator Report does not approve the sale.
The administrator remains responsible for deciding whether the sale should proceed.
The evaluator provides an independent written opinion. The administrator must consider that opinion before completing the transaction, but the final decision remains with the administrator.
This distinction is important. The evaluator is not acting as the administrator, purchaser’s adviser, creditor representative or court. The evaluator’s role is independent and specific.
Can the administrator ignore the report?
The administrator is not bound by the report, but they cannot simply ignore it.
The administrator must consider the report before completing the sale. If the evaluator is not satisfied and the administrator still proceeds, the administrator will need to explain why they consider it appropriate to do so.
In practical terms, this means the report is an important document. It forms part of the record of how the connected-party sale was reviewed.
You can find answers to common questions about the process on our FAQs page.
How long does an Evaluator Report take?
At Admin Eval, we typically produce Evaluator Reports within 48 hours of receiving the required information.
Where the transaction is urgent, early engagement is important. The sooner the evaluator is involved, the easier it is to identify the information required and avoid delay later in the process.
Connected-party administration sales often move quickly. Our aim is to provide the independent review required by the regulations while supporting the practical timetable of the transaction.
If you have an urgent matter, you can contact us to discuss the next steps.
What happens if there has already been a previous report?
If a previous Evaluator Report has been obtained in relation to the proposed disposal, this needs to be disclosed and considered.
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 conclusion.
If there has been a previous report, or if there has been any earlier evaluator involvement, it is important to raise this at the outset.
If no previous report has been obtained, that may also need to be confirmed.
Why choose Admin Eval?
Admin Eval specialises exclusively in independent Evaluator Reports for connected-party sales in administration.
That focus matters. Evaluator Reports are a narrow and specific requirement, and the process is often urgent. We understand the pressure on connected purchasers, directors and advisers when a sale needs to be completed quickly and properly.
Our role is to make the process clear, practical and efficient.
We provide:
clear initial guidance;
a focused information request;
transparent fixed-fee pricing;
independent review of the proposed sale;
direct communication with advisers where appropriate;
timely preparation of the Evaluator Report.
You can read more about Admin Eval and our approach on our About page.
Need an Evaluator Report?
If you are a connected purchaser, director, solicitor, accountant or adviser involved in a proposed administration sale, we can help you understand whether an Evaluator Report is required and what information will be needed.
Contact Admin Eval for an initial discussion.
Email: enquiries@admineval.co.ukTelephone: 07824 348338
FAQs
Is an Evaluator Report always required in a pre-pack administration?
No. It depends on whether the sale is to a connected person, whether the sale is substantial, whether it takes place within the first eight weeks of administration, and whether creditor approval is being obtained instead.
Who instructs the evaluator?
The connected purchaser usually instructs the evaluator and provides the information required for the report.
Is the evaluator acting for the purchaser?
The evaluator is instructed by the connected purchaser, but the evaluator’s role is independent. The report must provide an independent opinion on the proposed sale.
Does the administrator have to follow the Evaluator Report?
No. The administrator must consider the report, but the final decision remains with the administrator.
Can Admin Eval help before the company enters administration?
Yes. In many cases, it is sensible to engage early so that the required information can be identified before the sale timetable becomes urgent.
For early advice, please contact Admin Eval.
