CONTROVERSIAL BUSINESS INSOLVENCY processes are being opened up to the public to inject more transparency and confidence, said business, innovation and skills minister Ed Davey.
The key proposal could reveal how insolvency practitioners reached a decison to sell insolvent businesses through pre-pack administrations.
Pre-packs have been shrouded in controversy because a business is marketed before entering administration and sold immediately after.
Practitioners could have to file a report on the details of the decisions made to sell the insolvent company to Companies House – making it easier for the general public to obtain them. The reports, known as SIP 16s, are currently only sent to the Insolvency Service and creditors.
SIP 16s include information on why a pre-pack was chosen, information on the buyers, and how the business was marketed before administration.
“These will in future need to be included in their [insolvency practitioners] administration proposals which are lodged at Companies House, making the information available to business as a whole, including credit reference agencies.
“Administrators will also need to confirm that the sale price represents best value for the creditors,” said Davey.
Pre-packs have long proved controversial. Marketing of the business is conducted without the knowledge of staff, and in many cases creditors, until after the deal is completed. Often the business is sold back to the directors or owner.
The Insolvency Service is today publishing a report on SIP 16s.