Government gets tough with pre-pack administrators
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By Joanna Bourke
NEW RULES FOR controversial pre-pack administrations, making it harder for business owners to set up phoenix companies, are set to be implemented by the year-end.
Business minister Edward Davey revealed plans last week to improve conidence in pre-pack sales, including the introduction of a three-day notice period for creditors ahead of a pre-pack deal.
He says: “In order to inject greater transparency into the process we intend to require administrators to give notice to creditors where they propose to sell a sig niicant proportion of the assets of a company to a connected party. Where such sales are at undervalue, creditors get less than they should. Competitors who pay their debts in full also suffer.” The changes will be welcomed by the haulage sector, which has long pressed for tighter rules.
Geoff Dunning, chief executive of the Road Haulage Association (RHA), says: “We welcome changes that will allow creditors to be warned that a pre-pack sale is imminent, as this at least means that they will be in a position to either stop the sale, or make an offer for the assets.” However, he warns that the RHA will be keeping a close eye on the detail of the proposed changes.
Geoff Hill, MD of Lincoln-based Rase Distribution, says: “I totally disagree with the government stance on pre-pack administrations: the sooner they are clamped down on the better, and I believe the same tough approach should be applied to company voluntary arrangements.” Anthony Finlayson-Green, MD of Cert Octavian, says: “This is a good move, because rules need to be tighter to stop reckless operators who keep making bad business decisions from just setting up again and again.”
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