Insolvency trade body R3 has criticised the Insolvency Service (IS) for its “misleading” reporting about non-compliant pre-packs.
Yesterday the IS released its report on the number of pre-packs which adhered to SIP 16 standards during 2011.
It found 7% of the sample reviewed – involving 29 companies in administration – contained substantially deficient SIP 16 disclosures resulting in referrals to regulatory bodies.
However, R3 has interpreted the statistics differently and countered that 4% of pre-packs led to referrals.
While the IS has calculated the ratio out of the number of cases it reviewed, R3 opted to determine the figure from the total number of cases received – even though only 58% were analysed.
R3 insisted the “vast majority” of SIP 16 reports were fully compliant and criticised the IS for being too focussed on “technicalities” rather than “genuinely addressing the concerns of creditors”.
Instead R3 president Lee Manning urged the IS to focus on “serial phoenixes” and the “errant directors” that cause the “real problem”.
He said: “We should be working together to achieve that end – rather than quibbling over what constitutes a ‘compliant report’ on a pre-pack.
“Our members tell us of situations where they extensively marketed a business, but the lack of the word ‘marketing’ in their SIP 16 report led to it being deemed ‘non-compliant’.
“R3 continues to call for more feedback to IPs on exactly how the IS assesses SIP16 reports.
“Actually telling IPs where they have ‘gone wrong’ would greatly help to cut down on the sort of technical infringements that currently dominate the compliance statistics.
“For heaven’s sake let’s move the discussion on from whether a report was filled out with every ‘t’ crossed and focus on catching directors who are taking advantage and need to be pulled out of the system.”