Landlords slam government u-turn on pre-packs
Published: 26 January, 2012
The British Property Federation has criticised the government for scrapping proposed new legislation that would have tightened the rules on pre-pack administrations
In response to the u-turn, the BPF called for immediate action to increase protection for the creditors of businesses which use pre-packs, which have been subject to abuse and have left creditors out of pocket.
The rejected package of reforms, first mooted 18 months ago by Business Innovation and Skills minister Ed Davey, required insolvency practitioners to notify creditors in advance of a pre-pack and allow them three days to scrutinize the proposals to ensure they represent the best deal for creditors, and to give them time object if they wish.
The BPF had argued that three days would be insufficient and called on ministers to extend this notice period, but instead, the proposal has been scrapped completely. Ed Davey announced today that the reform would not go ahead due to a long-standing government moratorium on new regulations affecting ‘micro-businesses’, despite the fact that this would have been obvious when consultation started 18 months ago.
BPF director of policy Ian Fletcher said: “This decision leaves creditors as exposed to sharp practice as when this debate started 18 months ago. Whether by legislative or non-legislative means creditors now expect the Government to move swiftly to provide increased protection. The government recognises there is an issue to be resolved, and having wasted so much time anything less than swift action would be deeply unsatisfactory.”
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