The Insolvency
Service published its report on the first six months’ operation of
Statement of Insolvency Practice 16 (SIP 16) today.
The report looks at insolvency practitioners’ compliance with
the SIP and whether the increased use of pre-packs has resulted in
an increased incidence of directors’ misconduct, particularly in
relation to the insolvent company’s debts being left unpaid whilst
assets are sold on to a new company.
Graham Horne, The Deputy Chief Executive said, “Insolvency
practitioners have generally been positive in their approach to
the SIP and its aims, although there is still a fair way to go to
ensure that creditors receive the information they need in a
timely manner. We will be looking to strengthen SIP 16 to ensure
it gives creditors what they want.”
He then went on to say, “On the information currently available,
directors’ misconduct does not appear to be more prevalent in
cases involving pre-packs than in other insolvencies.”
The Insolvency Service reviewed 572 SIP 16 reports. 65% were
fully compliant with the disclosure requirements of the SIP. 3% of
the cases reviewed were referred to the insolvency practitioners’
authorising bodies. The key failing was a lack of sufficient
detail for creditors to be able to properly assess the merits of
the sale.
The report covers the operation of the first six months under
SIP 16. The main areas where reports fell down were:
Statements being issued to creditors late;Missing details of a
valuation or marketing exercise;Omitting details of a connection
between the insolvent company and the purchaser of its business.
The Insolvency Service will report again in early 2010.
The full report can be found on the insolvency service website
under, Policy Changes and Evaluation: http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/policychange/policychange.htm
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1. The Insolvency Service carries out confidential enquiries on
behalf of the Secretary of State for Business, Innovation and
Skills, through the Companies Investigation Branch. The Service
also authorises and regulates the insolvency profession; deals
with disqualification of directors in corporate failures; assesses
and pays statutory entitlement to redundancy payments when an
employer cannot or will not pay employees; provides banking and
investment services for bankruptcy and liquidation estate funds;
and advises ministers and other government departments on
insolvency law and practice.
2. The SIP 16 reports reviewed can be broken down into three
categories: 65% fully compliant with the SIP; 3% showing serious
failures to comply; and 32% which either appear to be
non-compliant in less serious ways, or which await further
clarification by the insolvency practitioner.
3. Further information about the work of The Insolvency Service
is available from: www.insolvency.gov.uk
4. Media enquiries should be directed to: Lorna Dennis,
Communications Manager, Insolvency Service, 21 Bloomsbury Street,
London, WC1B 3QW. Telephone: 020 7637 6279 or Ade Daramy, Press
Officer on 020 7596 6187.