Daniels Silverman shocked at Governments decision on pre-pack administrations

Edward Davey announced yesterday that the Government is to take no action to strengthen the legislation governing pre-pack administrations. This is extremely disappointing, especially when their own 18 month consultation revealed how unfair they can be on unsecured small business creditors. Carole Hughes, managing director, Daniels Silverman, says: “Whilst the final decision had been delayed […]

Edward Davey announced yesterday that the Government is to take no action to strengthen the legislation governing pre-pack administrations. This is extremely disappointing, especially when their own 18 month consultation revealed how unfair they can be on unsecured small business creditors.

Carole Hughes, managing director, Daniels Silverman, says:

“Whilst the final decision had been delayed from last year, I was hopeful the Government would recognise the unfairness of such procedures in many pre-pack administration cases, especially those involving sales of assets to related parties, many of which take place at undervalue. I have seen at first hand the devastating effect this can have on unsecured small business creditors, many of whom lose their own business as a result. There is a culture at present which allows debtor companies to avoid their debt and carry on trading by misusing pre-pack administrations. It is always the unsecured small business creditors who suffer as a result.

I am extremely concerned the Government has not felt it necessary to protect the interest’s of SME’s when they are so important to the country’s economic recovery and are expected to play an important part in creating new jobs and boosting the economy. This is a real set back to SME’s”

As a result credit management and debt recovery company Daniels Silverman are re-launching their online petition http://www.danielssilverman.co.uk/petition.php to campaign for the Government to reconsider tough legislation to stop the abuse of pre-pack administrations and encourage all business owners to offer their support.

In particular for statutory force to be given to the Statement of Insolvency Practice (SIP 16) along with penalties for non-compliance, to help prevent the abuse of the pre-pack system by companies avoiding debt.

Daniels Silverman is also calling for:

Tougher scrutiny by the Insolvency Service against potential rogue directors
A clampdown on Insolvency Practitioners (IPs) marketing pre-packs as a way for directors to avoid their debts
More stringent rules where directors have been involved in one or more pre-pack administrations and those involving the sale of assets to related parties.

The petition is live at

http://www.danielssilverman.co.uk/petition.php