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Landlords hit out at rise of non-compliant pre-packs 16 May 2012

The British Property Federation (BPF) has slammed insolvency practitioners (IPs) for “acting more in the interests of the buyers than creditors”.

It comes after the Insolvency Service (IS) released figures showing the number of pre-packs which were not fully compliant rose from 25% in 2010 to 32% in 2011.

The amount of cases referred to the relevant regulatory bodies also rose from 13 to 29 despite the sample size remaining largely the same.

And BPF director of policy, Ian Fletcher, hit out at this increase.

He said: “It is disappointing that non-compliance has risen to a third at a time when landlords more than ever need an insolvency system they can rely on in the face of continued retail difficulties.

“The prime role of the IP in any rescue is to secure the best result for creditors, not to maximise the profits of the new company and we are becoming increasingly concerned IPs are acting more in the interests of the buyers than creditors.”

Fletcher also voiced fears that retail insolvencies are damaging pensioners’ savings.

He added: “We’re particularly concerned that, in some of the most high-profile retail insolvencies, tens of millions of pounds are lost in pensioners’ savings as concessions are extracted from landlords of profitable stores by the new buyers of the insolvent company.”

Last month, a war of words broke out between the BPF and trade body R3 over the fairness of pre-packs.

In launching its campaign against the current system the BPF criticised pre-packs for being “deliberately vague” and a means of reinforcing failure.

However, at the time, R3 president Lee Manning countered: “We do not accept the BPF’s assertions regarding ‘underhand’ dealings by insolvency practitioners (IPs), nor do we accept that the UK’s insolvency system is not fair.

“A pre-pack allows a potential sale when other options have run out, and maintaining some value in the ailing business is in everyone’s interests, including landlords.”

 

 

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