TMA, The trade association challenged the House of Commons Business & Enterprise Committee to produce hard evidence for its damning claims over pre pack administration, which included an assertion that unsecured creditors of companies undergoing pre-pack administrations were "initially kept in the dark and then left empty-handed."
A Pre Pack Administration is all about saving a viable business from closing down forever.
The MPs’ report on The Insolvency Service, published last week, also concluded that phoenix buy-backs caused "particular outrage," and that many small to medium enterprises were suffering "unreasonable financial harm" as a result of pre-packs.
The report stated: "Pre-packs of this kind fuel understandable concerns about illegitimate, self-serving alliances between directors and insolvency practitioners. The interests of unsecured trade creditors must take a higher priority, especially in ‘phoenix’ pre-pack administrations."
Justin Stephenson Director of the TMA stated that "Yes, there have been occasions when pre-packs have been abused, but legal powers already exist to strike off directors and disqualify insolvency practitioners involved in such cases.
"And neither these abuses nor the small disadvantage to unsecured creditors alter the fact that pre-packs can be a very valuable tool in the right circumstances to save businesses and jobs and minimise losses to secured creditors. Saving viable businesses must be the ultimate goal for the greater good of UK plc."
For more information on pre pack administration or to discuss your Company with a trained corporate recovery specialist follow the links or contact Phillip Evans direct on 0797 0500 425.