Pre pack administrations to be reviewed

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The long awaited government commissioned review of pre pack administration conducted by Teresa Graham has recommended that potential administrations are subject to investigation by a panel of industry experts prior to being given the green light.

The governments business secretary Vince Cable commissioned the report to be done last year. The report found that whilst pre-pack administrations may conserve jobs and provide a reduction in the costs associated with insolvency, there needs to be greater transparency and a boost in creditor confidence.

In the report, Graham strongly recommends that group of industry experts review any administrations that have been highlighted for review, on a voluntary basis.

These proposals have been made with a view to targeting pre pack administrations where the business is sold to a connected party, usually involving an existing director.

Ms Graham’s report has been welcomed by both the government and figures within the industry.

President of insolvency trade body R3 Giles Frampton commented “Teresa Graham’s report is an excellent contribution to the pre-pack debate”

“It is also encouraging to see the reports recommendations focus on more than just the IP’s role in a pre pack. Instead, and rightly so, the report turns the spotlight on the directors involved”

 

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