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British Property Federation concerned over unfair insolvency bias21st May 2012

The British Property Federation (BPF) has expressed disappointment at Government figures, which show an increase in insolvency professionals failing to comply with guidance governing pre-pack administrations.

Figures published by the Department for Business Innovation and Skills (BIS) show that non compliance with SIP 16 guidance, which ensure that creditors are given sufficient information to understand a pre-pack, has increased from a quarter to a third.

A ‘pre-pack’ is a fast-track administration that avoids a failing business being sold on the open market. An insolvency practitioner instead lines up an advance purchaser to take over the profitable parts of the business, with the company going into administration simultaneously. Most recently Game, Blacks and La Senza were snapped up in this manner.

The BPF recently kicked off a campaign to restore fairness to the insolvency system.

Ian Fletcher, director of policy at the British Property Federation, 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.

“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. 

“The prime role of the Insolvency Practitioner 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 that Insolvency Practitioners are acting more in the interests of the buyers than creditors.”

Tags: Financial

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