Pre-pack reforms delayed
Quick insolvency process reforms put back until 2012
RADICAL CHANGES to pre-pack administrations have been delayed, the Insolvency Service has confirmed.
The highly criticised process involves marketing a business prior to it entering administration and selling immediately thereafter. A company can also be sold back to the directors or previous owners.
The government minister responsible for insolvency, Ed Davey (pictured), had previously claimed the overhaul would take effect before the end of the year.
However, the Insolvency Service confirmed it will not come into effect until next year. Sources close to the issue claim April is when changes are likely to take place, as historically it is the favoured month for insolvency-related updates.
“Following discussions with stakeholders, amendments are being made to the Statutory Instrument (SI) by our lawyers. The SI will not be coming into force by the end of this year and we are now aiming for next year.
“We have endeavoured to take note of representations from all sides of the debate,” an Insolvency Service spokesman said.
The reform will see creditors given three days’ notice if a company is sold to a connected party.
Insolvency experts have warned that slowing the rapid turnaround insolvency procedure could end up handicapping a valuable tool and lead to increased company collapses.