Following the outcry from creditors up and down the UK who have lost out in pre-pack administration deals, the government has announced a new code of practice for insolvency practitioners.
The problem was of course, that creditors were kept in the dark about who was taking over the business, what the terms were and what the extent of the insolvency pactitioner's involvement in the introduction.
Now administrators have to disclose full information to the creditors before the deal gets put through. The code outlines a whole raft of procedures that must be complied with by the administrators. They must be especially mindful of obligations and duties due to all creditors before the pre-pack administration deal is set. The government wants creditors to be provided with full facts on the case and why a pre-pack administration is in the best interests for all parties - so they can be satisfied that the insolvency practitioner has carried out his job properly, and not for the sake of expedience.