What protection do creditors have?
Administrators are subject to professional guidelines which specifically relate to pre-packs. These guidelines are contained in the Insolvency Service’s Statement of Insolvency Practice 16 (“SIP 16″) which took effect on 1 January 2009 and was introduced as a result of creditors’ concerns about pre-packs. SIP 16 sets out a detailed list of the information which administrators should disclose to creditors where there has been a pre-pack. SIP 16 is not legally binding but failure to comply with it could result in an administrator facing regulatory or disciplinary action. In certain circumstances, creditors also have a statutory right to bring an action against the administrators. However, a cheaper and less formal way for creditors to raise complaints is by calling the Insolvency Service’s pre-pack complaints hotline. Is the law relating to pre-packs likely to change? There is pressure on the government to adopt laws which expressly deal with pre-packs. This could make pre-packs subject
