The government is investigating whether further regulation of pre-pack administration sales is needed, after measures were introduced to try and improve transparency.
The review of the impact of these measures comes after MT's sister magazine Commercial Motor revealed that out of 371 pre-pack administrations since November 2015, just 53 were reviewed by a voluntary panel of experts.
The industry measures arose from the recommendations of the Graham Review in 2014, which found that pre-pack sales were a useful business rescue tool, but that there was evidence of less successful outcomes when the sale was to a connected party.
The pre-pack pool was one of the measures, enabling an independent ‘pool member’ to provide an opinion on the purchase of a business and its assets.
The sale of assets of Widdowson Logistics to Birds Transport Leicester and Fleetstyle Distribution’s sale to Gateway Wales are recent examples of pre-packs that did not approach the voluntary pre-pack pool.
The Insolvency Service said that its assessment will look at the impact of reforms on all connected party sales in administration.
It added that this would “help to inform decisions on whether further regulation is needed prior to the expiration of the regulation making power” concerning property sales to connected parties in administration.
