The government-commissioned review of pre-packaged administrations by Teresa Graham was released on Monday 16 June, proposing potential pre-pack deals should be scrutinised by a panel of “experienced experts” before going ahead. Insolvency News presents a round-up of reactions from leading industry figures.
Teresa Graham, CBE
“My review of pre-pack administrations over the last nine months shows that they have a unique place in the insolvency market.
“However there must be major changes in the way they are administered. I believe my proposals, implemented as a complete package, will lead to real improvements in pre-packs. I hope the insolvency industry, as well as all those in business, will embrace these measures as it is in everyone’s interest that they are successful. I believe they will lead to real improvements in transparency and scrutiny.”
Jenny Willott, business minister
“When these types of business sales are carried out properly, they allow the viable parts of the business to continue operating and jobs are saved. But it is also important for those who are owed money to know they are getting the best possible deal in the circumstances. Transparency is vital.
“Teresa Graham has come up with a set of recommendations which will ensure people get back as much money as possible and make pre-pack deals more transparent. We will be working with business and industry to implement these recommendations in full and we believe it will help restore trust and confidence in pre-pack deals. We will monitor progress closely and will take the power to legislate if necessary.”
Vernon Soare, director of professional standards, ICAEW
“Teresa Graham’s recommendations tackle the myths about pre-packs. We are pleased the review shows that when pre-packs are done properly, they can bring big benefits to the UK economy because they save jobs and costs. However, we understand that those involved in insolvency proceedings need to trust the pre-pack process, which is why we support the review’s recommendations to improve its transparency.
“We specifically support the recommendations that directors should take more responsibility about the ongoing viability of Newco and that there should be independent scrutiny of a deal before the event. As the government develops its response to the review, we will be very happy to share our expertise to establish the proposed pre-pack panel.
“As the largest regulator of insolvency practitioners, we are happy to engage with the government to make these proposals work in order to maintain the pre-pack as a legitimate tool of the UK’s rescue culture.”
Giles Frampton, president, R3
“Teresa Graham’s report is an excellent contribution to the pre-pack debate. We fully support her conclusion that there is a place for pre-packs in the UK’s insolvency framework.”
“As the report says, pre-packs can help save jobs and do provide benefits for creditors too. The report will help dispel some of the myths that exist around the pre-pack procedure.”
“Debate around pre-packs has long suffered from a lack of empirical evidence. This report helps plug that gap.”
“The report’s recommendations are innovative, measured, and worth exploring. Balancing transparency and the need to protect the value of a business in difficulty is difficult to achieve: many of the review’s proposals may help redress this balance.”
“It is also encouraging to see the report’s recommendations focus on more than just the insolvency practitioner’s role in a pre-pack. Instead – and rightly – the report turns the spotlight on directors involved in a connected party pre-pack.”
“We very much look forward to seeing the government’s full response to the report’s recommendations, which we are keen to see developed.”
Phillip Sykes, head of restructuring & insolvency, Moore Stephens LLP
“The Graham Review has done an excellent job in producing research that shows the vital role pre-packs play in helping struggling businesses preserve jobs whilst maintaining as much value as possible to repay creditors.
“Injecting transparency into pre-packs with a connected party is a very sensible idea that will help to reassure creditors that they are getting a fair deal. The review provides a broad framework for this to happen, but it will be crucial to get the details right to avoid the risk of unintended consequences that might deter the use of pre-packs.
“There is a real risk that the amount of information included in the reports for the pool becomes unmanageable, as existing business owners try to protect themselves from any potential litigation by disclosing as much as possible in their pre-pack proposal.
“If pool members are swamped in documents this could make it very difficult for pool members to make an informed decision within half a day.”
Posted on 19th June 2014 by
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