14 October 2013

BPIF Attend CBI Round-table on Pre-packs

The CBI Round-table on Pre-packs on the 18th of September 2013 was chaired by Teresa Graham, CBE, who had been asked to conduct an independent review of this area by Vince Cable. The meeting was one of a series she will be holding with various stakeholders

A mixed group attended and therefore a range of views were expressed. The financial services sector attendees, British Bankers Association, Asset Based Finance Association, Institute of Chartered Accountants, were broadly favourable to pre-packs as a vehicle for preserving distressed companies.

The representative from the Road Haulage Association and BPIF argued the negative impact of pre-packs on the wider economy and the unfair competitive advantage they have relative to other companies in their sector.

The BPIF made all of the points we have voiced to the Insolvency Service over the past three years and articulated what actions we think should be taken to deal with the issue (as set out in Priorities for Print 2012-13). We stressed that the value of any jobs and turnover preserved through pre-packing was greatly outweighed by that lost elsewhere in competitor companies. We believe we were able to get our message across.

Teresa Graham said that she understood the importance of increased transparency and scrutiny for proposed pre-packs before the event, particularly where the sale is to a connected party. Her remit does allow her to propose regulatory reforms (the current three-year moratorium of new legislation impacting on small business runs out in April next year). She said that she will be prepared to recommend regulatory reforms if she determines that these are desirable, but that she would prefer to come up with changes that do not involve new regulation if possible as she is "by instinct a de-regulator".

The review will take some time and we except her report next spring at the earliest.