‘Pre-pack’ Compliance Review Welcomed but Corporate Priorities Need to Be Reassessed, Warns KPMG
Commenting on the roundtable meeting, hosted by Norman Lamb MP as part of the ongoing review of ‘pre-pack’ administrations, Richard Fleming, UK Head of Restructuring at KPMG said:
“Ensuring the insolvency profession complies with regulation such as SIP 16 – which details the events leading up to the pre-pack administration and the commercial rationale behind the sale – is a crucial way of buttressing the validity of pre-packs as an essential part of the insolvency practitioner’s tool kit. Since 2008, we have seen numerous examples of pre-packs saving jobs and the viable parts of severely distressed businesses. In January we saw an economic trail of destruction on the High Street, but well-known brands such as Blacks and La Senza have been the beneficiaries of pre-pack procedures: more stores have stayed open and thousands of jobs have been saved.
“It is right and proper that a profession, which is charged with dealing with the worst ramifications of corporate failure, is transparent, consistent and independent. These factors require monitoring and we, as an industry, must ensure procedures such as pre-packs are applied appropriately. However, with the spectre of further fall out in the Eurozone and real home grown economic growth just out of reach, surely we should be focussing our efforts on the health of companies rather than those companies which are already in A&E? It is important to hold company directors to account, but we also need to encourage good business. Society must decide on the appropriate balance of regulation on the one hand and encouraging entrepreneurs on the other: chasing miscreant directors versus fostering astute directors. The corporate health campaign, which applies to the vast majority of businesses, should be a positive ‘eat 5 portions of fruit a day’ message. The current message seems to be too focussed on the post mortem of insolvent companies, which we must remember form a small minority of the corporate UK population.”