R3: Regulator failing to address pre-pack concerns
Insolvency body president pleads with regulator to move reports on from box-ticking exercise
THE INSOLVENCY REGULATOR is failing to address concerns about pre-pack administrations, said insolvency trade body R3.
According to a report published by the government’s Insolvency Service just 4% of reports relating to pre-packs (SIP 16s) were referred to practitioner licensing bodies.
However, president of R3 Lee Manning warns that the regulator is more focussed on “technicalities” of compliance from reports, than seriously addressing concerns raised by creditors on the need for transparency in these types of administrations.
A pre-pack usually involves the sale and marketing of a business arranged prior to it entering a formal insolvency process, it is then sold immediately after entering one.
“For heaven’s sake let’s move the discussion on from whether a report was filled out with every ‘t’ crossed and focus on catching directors who are taking advantage and need to be pulled out of the system,” said Manning (pictured).
“Pre-packs give higher returns to creditors than a business sale after a period of administration trading as well as save jobs by preserving value in the company, but the public needs to be reassured that company directors are not able to act as delinquent pre-packers and take advantage,” said Manning.
The president confirmed the trade body would work with the Insolvency Service and other insolvency practitioner licensors to increase transparency in the system.