Edward Davey MP has confirmed that the Insolvency Service has decided not to implement changes to the law regarding pre-pack administrations having consulted on proposals to introduce new legislative measures.
This is the conclusion of a lengthy consultation which caused disquiet amongst many insolvency practitioners, who considered the proposals to change the legislation were misguided, in particular the suggestion that creditors should have three day’s notice of a pre-pack administration. The inference from the proposals was that the Government believed a creditor would have the time to apply to court for an injunction during the proposed three day period.
However, Edward Davey MP today acknowledged that while concerns remained about the use of pre-pack sales, the merits of the current process outweighed the drawbacks of changing the regime. He said: “The Department of BIS have discussed the merits and practical application of the proposed measures with a range of interested parties, including secured and unsecured creditors, IPs and business representatives.
Having taken account of all the issues, the government is not convinced that the benefit of new legislative controls presently outweighs the overall benefit to business of adhering to the moratorium on regulations affecting micro-business which is an important part of this government’s deregulatory agenda.”