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Changes to pre-pack administration pushed back
Changes to pre-pack administration pushed back
No changes will be brought in to the current pre-pack administration system this year, the Insolvency Service has confirmed.
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No changes will be brought in to the current pre-pack administration system this year, the Insolvency Service has confirmed.
The government is expected to introduce rules saying that all creditors must be given three days warning before a pre-pack administration deal is made, but this is now not expected to be brought in until early 2012.
Pre-pack administration is favoured by many insolvency practitioners as it allows for a quick sale which can help save jobs and keep the business trading. Secured creditors, such as the bank, have to give permission but administrators are not required to give notice to unsecured creditors.
The system is controversial as companies are often sold back to the owners with much less debt so creditors feel that directors are given a second chance, despite causing a company to fail in the first place.
Business experts argue that three days notice for pre-packs would dent consumer and supplier confidence and make more directors opt for liquidation which could see more staff losing their jobs and reduced returns for all creditors, secured and unsecured.
There are a number of options available for businesses that are looking for some help, whether they are suffering with cash flow problems, looking into invoice factoring or considering any form of insolvency, therefore it is important for directors to get specialist advice from a reputable business recovery company so that informed decisions can be made about the future of any struggling company to help safeguard jobs and the value of the business.
For more info visit: http://www.realbusinessrecovery.co.uk
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