The changes would be made to the current legislation, which dates from 1986, and could be brought in as early as this October.

Following an IS consultation into the current rules, it is now proposing that administrators would have to give creditors three days’ notice if they intend to sell a significant portion of the business back to a connected party without openly marketing the sale.

If adopted, the new rules would also require the administrator to include a SIP16 style report to justify any case where a significant part of the business is sold off prior to the administrator’s proposals or the liquidator’s first progress report being issued.

Finally, administrators would be required to clearly state in their report that the price paid in a pre-pack sale represents the best value for creditors.

A working copy of the proposed changes has been made available at the Insolvency Service website.

Comments can be made up to 29 June by contacting the body at ippolicy.section@insolvency.gsi.gov.uk.