Business Secretary Vince Cable has launched a review of the pre-pack administration process amid concern that the system is causing problems for creditors.
Pre-pack administrations have been a controversial issue for some time now but the matter has come to a head again this year as another flurry of companies hit the wall.
Internacionale is one of the latest distressed businesses to be sold through a pre-pack administration. Its administrators at EY sold the firm as a going concern almost as soon as they were appointed.
Cable has suggested that the heavy reliance on pre-packs within the insolvency industry could provide rogue traders with the cover under which they could abandon their debts and continue trading under a new name.
He added that they could function as “a quick move to keep the company going in a new form and keep the jobs in place” but noted that there is a risk this will come at the cost of unscrupulous traders using the law to hide from their debts.
“You do have these so-called phoenix companies when owners cynically shut down their companies in order to wipe out their debts and start again the following day under a slightly different name," he said. "Where there is evidence of that kind of serial behaviour, acting against the interest of legitimate parties like creditors, we want to make sure that is properly taken into account in the company disqualification process."
The comments came during the Business Secretary's speech at the London Stock Exchange in which Mr Cable also brought up the matter of 'zombie companies'. Discussed by various economists in recent times, this phenomenon involves fundamentally flawed businesses hanging on due to low interest rates. The Business Secretary warned that these companies could quite easily fall in to administration as soon as economic conditions change. 
A leading engineering firm focusing on electric power steering solutions and bespoke wiring harnesses serving various industries. It operates as two entities both reputable for maintaining high standards and offering bespoke solutions for clients. In...
Market-leading fruit and vegetable supplier distributing fresh produce and complementary goods both wholesale and D2C. The companys uncompromising drive for customer satisfaction has built strong relationships with across an enviable client base incl...
Turnkey construction services provider completing a range of projects with expertise across maintenance general refurbishment new build and conservation including work on listed buildings. The company provides full-service construction works utilisin...
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.