Carl Faulds, IPA president, said it was clear that insolvency practitioners (IPs) do not do “the best selling job to unsecured creditors” in arranging pre-packs. But the existing regulatory requirements on SIP 16 do not assist in demonstrating that IPs do the best job for companies and creditors alike.
Faulds said: “The profession is not embracing SIP16 and giving proper justification for pre-packs to creditors. The old ‘box ticking’ approach to SIP16 is the way most practitioners seek to comply, but the world has now moved on and so must IPs.
“If every IP gave a detailed justification for a pre-pack to creditors in every case, which is what is actually required by SIP16, the government or creditors or the press would not have good cause to kick the profession.”
He added: “We have to be realistic and tackle the perceptions that dog our profession by giving full explanations and justifications to creditors, being willing to have our fees reviewed and justifying them – in effect dealing with the issues that create such a negative view of insolvency practitioners.”
Faulds said that regulators can only regulate truly effectively if there is clear guidance as to what is acceptable.