Do unsecured creditors have any way to challenge a pre-pack?
Creditors have a statutory right to bring an action against an administrator under paragraphs 74 and 75 of Schedule B1 to the 1986 Act. Paragraph 74 relates to conduct causing unfair harm to a creditor’s interests or where an administrator is not performing his functions quickly and efficiently. Paragraph 75 relates to misfeasance. SIP 16 (see above) may help provide creditors with the information that they need to bring such an action. A less formal and cheaper way of challenging a pre-pack is to contact the IS’ pre-pack complaints hotline (see PLC Corporate, Legal update, The Insolvency Service sets up a pre-pack complaints hotline (www.practicallaw.com/6-385-0467)). Administrators could face regulatory or disciplinary action if they have failed to comply with SIP 16 (see above) and directors of a company that is pre-packed can be disqualified if their conduct in the period leading up to the pre-pack is considered to be unfit. For more information on the disqualification of directors
