Greater use of pre-packs ‘has not led to more instances of misconduct’

Posted 20/07/2009

Misconduct by company directors does not appear to have been more prevalent in insolvency cases involving pre-packs, a new report has stated.

This week, the Insolvency Service published a report about the impact of the Statement of Insolvency Practice 16 (SIP) since its introduction six months ago.

The organisation looked at whether the increased use of pre-packs had led to increased incidences of wrongdoing by business leaders, such as leaving debts unpaid when assets are being sold to a new owner.

Graham Horne, deputy chief executive of the Insolvency Service, said this does not appear to have been the case, as misconduct has been just as prevalent as it is in other insolvencies.

He added that insolvency practitioners have “generally been positive in their approach to the SIP and its aims”.

However, Mr Horne said there is a “fair way to go” to ensure that creditors receive the information they require when it is needed.

This comes after Stephen Speed, chief executive of the Insolvency Service, said the group is “determined” to take action against the minority of rogue companies that deceive members of the public.

He urged people to be on their guard against the activities of “unscrupulous” operators.