Pre-packs may be "morally questionable"

The pre-packaged administration process can be "unacceptable" and even " morally questionable", according to a report by PricewaterhouseCoopers.

The firm's Turnaround Director Panel, which consists of over 100 turnaround professionals, has found members believe that work still needs to be done to ensure pre-packs have safeguards in place to increase confidence in this system.

The panel was split on the perception of whether or not a successful turnaround of a company includes the survival of a business with the use of a pre-pack.

There was some hope for distressed businesses, with 67% of the panel believing that most current turnarounds will be successful and 85% feeling their key trading indicators have levelled out or are starting to improve.

“Turnaround directors have been at the coal-face of UK Businesses attempts to survive through the recession and to that end it is really encouraging to see that they are beginning to see some positive signs in their work with distressed companies," said Richard Boys-Stones, partner, business recovery services at PwC.

According to 56% of the panel, the biggest hindrance to a company's success is its readiness to accept that it needs help, while another 86% are finding it hard to raise funding.

Further reading:

Pre-packs overtake normal administrations