THE GOVERNMENT has about-turned on proposed radical changes to pre-pack administrations, claiming it does not see the benefit of making legislative changes to them.
In a ministerial statement today insolvency minister Ed Davey said the “Government is not convinced” any changes to pre-packs would outweigh the benefits it currently provides.
Previously Davey caused uproar in the insolvency community when he announced several possible changes to the process including, delaying its rapid turnaround by three days.
However, the minister said today the government will not be seeking to introduce new legislative controls on pre-packs at this time.
A pre-pack entails the whole or part of a sale arranged prior to a business entering an insolvency process and sold immediately on appointment of administrators.
It was suggested by government that any pre-pack sale to connected party, such as former directors, owners or managers, would need three days consultation before a sale could go ahead.
This three day delay in the angered many practitioners who claimed it neutered the process, while the British Property Federation argued three days was not enough time for creditors to consider their options.
The regulator of the profession, the Insolvency Service, will review existing pre-pack legislation to see how more confidence and transparency could be injected into the process.
FRP Advisory sells business and assets of Harland Machine Systems Limited to Accraply Europe Limited
Manufacturer DMG Steelworkers has been sold out of administration in a pre-pack deal by insolvency and restructuring firm CVR Global
By threatening creditor returns, the government could undermine the UK’s World Bank insolvency ranking and cost creditors £8m a year, trade body R3 warms
Lee De’ath and Richard Toone, partners at CVR Global, were appointed joint-administrators of Lexden Centre (Oxford) Limited, trading as Colchester English Study Centre (CESC), on 29 June 2016