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More transparent pre-pack plans for insolvency come under fire

Published on 9 Apr 2010 under category: legal

New government plans to make the pre-pack process more transparent to creditors have come under fire from several industry bodies.

A report in Accountancy Age highlighted concerns shared by insolvency practitioners across the UK that the new procedures would only add to the costs.

Given that the reforms are intended to make sure asset sales are distributed fairly among creditors, adding additional costs to the pre-pack process could be self-defeating, say critics.

One of the options identified in a recent government consultation were making it illegal to fail to disclose information in the Statement of Insolvency Practice (SIP) 16 for pre-packaged sales.

A second proposal was to enforce the appointment of different insolvency practitioners to deal with the beginning and the end of the process, in order to reduce conflicts of interest.

The government's report was a response to a report from the Insolvency Service that revealed that more than a third of firms were following to disclose information on the standard SIP 16 form.

If you require advice on Insolvency and Bankruptcy please call us on +44 (0)20 7831 0101 and ask for Katherine Sillett