Pre-packs put under government scrutiny A REVIEW OF pre-pack administrations
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has been launched by the government following mounting concerns over the ease with which hauliers can walk away from debt.
The independent review is expected to address the long term effect of pre-pack deals.
It will also assess whether the deals cause detriment to any particular groups of creditors and, specifically, whether unsecured creditors are disadvantaged.
Details of the review were contained within a discussion paper that was announced this week by business secretary Vince Cable. The paper is entitled Transparency and Trust.
Cable, pictured, said: "We're proposing tough measures to beef up the system for holding directors to account if they don't play by the rules or take their responsibilities seriously."
He added that the proposed changes would mean "honest, hard-working" directors would not be disadvantaged.
The paper contains a number of proposals such as abolishing corporate directors where companies are listed as directors of other companies at Companies House, and whether courts can make compensation awards against directors when making a disqualification order.
The Department for Business, Innovation and Skills said that there were 728 pre-packs during 2012, representing 29% of all administrations.
One creditor, who said he had not received all of the £18,000 owed to it by Assured Logistics Solutions after it was sold in a pre-pack arrangement in 2011, told CM that he had felt obliged to work for the new company in order to try to claw back the money.
"It's a carrot you find dangled in front of you and you think, at least we can recoup something," he said. "You overcharge, if you can, but when it's large amounts of money you are never going to get it all."
• An investigation into the issue will appear in CM soon.