SIP 16 statement, explained — for buyers and creditors
After a pre-pack administration, the administrator must publish a SIP 16 statement to creditors within seven days. It's the closest thing to a public receipt for the deal. Here's what every section means, and the red flags to watch for.
- Source of the administrator's initial introduction
- Extent of marketing / effort to find alternative buyers
- Valuations obtained (going concern & break-up)
- Alternative courses considered and rejected
- Identity and connected-party status of the buyer
- Deal structure, price, deferred consideration
- Employees transferring under TUPE
- Evaluator's opinion (connected buyer, first 8 weeks)
How to read a SIP 16 statement
A pre-pack introduced by the buyer or the directors (not the administrator) is not disqualifying, but should be paired with visible independent marketing. Judge the marketing on its facts, not the introduction alone.
Look for named channels — trade press, sector brokers, direct approaches — and time-on-market. A one-line "the market was tested" without detail is a red flag. Compressed timelines should be justified (imminent enforcement, loss of key contract).
Two independent valuations — going concern and forced sale — are standard. A single valuation, or a valuation prepared by a party linked to the buyer, is a red flag. The price should sit sensibly within the valuation range.
If the buyer is connected (director, associate, family), the statement must record either an Evaluator's report finding the terms reasonable, or express creditor approval. Neither = the sale was likely unlawful under the 2021 regulations.
Green flags vs red flags
- • Named marketing channels with dates and outreach counts
- • Two independent valuations from qualified firms
- • Multiple bidders, with runner-up terms disclosed
- • Evaluator report referenced by name (connected buyer)
- • Clear explanation of why pre-pack beat alternatives
- • "The market was tested" with no specifics
- • Single valuation, especially by a linked firm
- • Connected buyer, no Evaluator, no creditor vote
- • Marketing period under a week without justification
- • Alternatives dismissed in a single line
If a SIP 16 doesn't add up
Creditors can ask the administrator for further explanation in writing; complain to the administrator's Recognised Professional Body (typically ICAEW, IPA, ACCA, CAI, ICAS or LawSocSco); and — in serious cases — apply to court under paragraph 74 or 75 of Schedule B1 for the court to review the administrator's conduct.
See Pre-pack administration explained for the underlying mechanics, and the pillar for creditor rights across all administrations.
Frequently asked questions
What is SIP 16?
Statement of Insolvency Practice 16 — a professional standard issued by the UK Insolvency Regulators covering pre-packaged sales in administration. It sets what the administrator must disclose to creditors, and when.
When is a SIP 16 statement issued?
Within seven calendar days of completion of a pre-pack sale (or as soon as reasonably practicable). It goes to all known creditors and is filed at Companies House with the administrator's proposals.
What must the statement cover?
In summary: the source of the initial introduction to the administrator, valuations obtained, the marketing done, alternative courses considered, why a pre-pack was chosen, the identity of the buyer, whether they are connected, and the Evaluator's opinion (for connected-party sales).
What is the Evaluator's opinion?
For sales to connected parties completed in the first eight weeks of administration, the buyer must obtain an independent Evaluator's report on whether the terms are reasonable. The SIP 16 statement must include the Evaluator's opinion or, if there is no Evaluator report, the fact that creditor approval was obtained instead.
What are the red flags in a SIP 16?
Minimal or unspecific marketing description; a single valuation (going-concern or forced-sale but not both); a connected buyer with no Evaluator report and no creditor vote; a very short marketing period without justification; and vague explanation of why administration was preferred over other routes.
Can creditors challenge a pre-pack?
Yes. Creditors can require the administrator to explain the SIP 16 disclosures further, complain to the administrator's regulator (Recognised Professional Body), or in serious cases apply to court under paragraph 74 or 75 of Schedule B1 for review of the administrator's conduct.
Is SIP 16 legally binding?
It is a professional standard, not a statute. Breach is a matter for the administrator's Recognised Professional Body and may result in disciplinary action. However, the connected-party regulations from 2021 give SIP 16 disclosure a statutory backbone for connected sales.
Where can I read the current SIP 16?
The version in force is issued by the six UK Recognised Professional Bodies (jointly with the Insolvency Service). Search for 'SIP 16 R3' or 'SIP 16 IPA' for the current text. Sell Ltd is not a regulator and does not host the standard.