Cable to put pre-packs on agenda
15 July 2013
In a speech later today at the London Stock Exchange, business secretary Vince Cable is expected to put the issue of pre-pack administrations firmly on the agenda.
Mon, 15 July 2013In a speech later today at the London Stock Exchange, business secretary Vince Cable is expected to put the issue of pre-pack administrations firmly on the agenda.
According to media reports over the weekend, he is expected to suggest that there is a need to look at the rules, where assets are bought out of a company immediately after it is placed in to administration.
Pre-pack administrations (often referred to as ‘doing a phoenix’) are a controversial subject in the recruitment industry. In 2011, Recruiter’s analysis revealed that at least 57% of the 61 recruitment agencies that went into administration during 2010 continued to trade in one form or another, usually with one or more of the same directors still in place.
Cable will say that he wants the process of pre-packs to be more transparent and fairer to creditors. In many cases companies that go into administration leave a tail of debts, not least to HM Revenue & Customs.
Supporters of the current arrangements say that selling a company to the existing management is often the best way of retaining staff and jobs, as once news of a company’s collapse gets out, both staff and clients tend to desert it.
According to media reports over the weekend, he is expected to suggest that there is a need to look at the rules, where assets are bought out of a company immediately after it is placed in to administration.
Pre-pack administrations (often referred to as ‘doing a phoenix’) are a controversial subject in the recruitment industry. In 2011, Recruiter’s analysis revealed that at least 57% of the 61 recruitment agencies that went into administration during 2010 continued to trade in one form or another, usually with one or more of the same directors still in place.
Cable will say that he wants the process of pre-packs to be more transparent and fairer to creditors. In many cases companies that go into administration leave a tail of debts, not least to HM Revenue & Customs.
Supporters of the current arrangements say that selling a company to the existing management is often the best way of retaining staff and jobs, as once news of a company’s collapse gets out, both staff and clients tend to desert it.
