SIP 16 Reporting - misleading to focus on 'compliance' when only 4% referred to RPBs
R3, the insolvency trade body is pleased that the vast majority of SIP 16 reports (guidance sent out to creditors by the administrator after the sale of a business in a pre-pack) have been deemed fully compliant, with just 4% resulting in referrals to regulatory bodies.
However R3 is concerned that the Insolvency Service’s approach to pre-packs and SIP 16 reports seems to be more focussed on ‘technicalities’ than on genuinely addressing the concerns of creditors.
Lee Manning, R3 President commented:
“Pre-packs are a proven rescue tool and in fact it is ‘serial phoenixes’ that cause the real problems. It would be in everyone’s interests if more of these errant directors were disqualified by the Insolvency Service and taken out of the system entirely. We should be working together to achieve that end – rather than quibbling over what constitutes a ‘compliant report’ on a pre-pack.
“Our members tell us of situations where they extensively marketed a business, but the lack of the word ‘marketing’ in their SIP 16 report led to it being deemed ‘non-compliant’. R3 continues to call for more feedback to IPs on exactly how the Insolvency Service assesses SIP16 reports. Actually telling IPs where they have ‘gone wrong’ would greatly help to cut down on the sort of technical infringements that currently dominate the compliance statistics.”
Lee Manning added:
“Pre-packs give higher returns to creditors than a business sale after a period of administration trading as well as save jobs by preserving value in the company, but the public needs to be reassured that company directors are not able to act as delinquent pre-packers and take advantage. We need to be tougher on the wrongdoers and strengthen regulatory SIP 13 which covers connected party sales.
“We are looking forward to working with the Insolvency Service and the RPBs on ways to improve confidence and transparency in the system and have a number of suggestions which we hope the IS will take forward.
“For heaven’s sake let’s move the discussion on from whether a report was filled out with every ‘t’ crossed and focus on catching directors who are taking advantage and need to be pulled out of the system.”
For further information please contact:
Will Black, R3 Communications Manager
t: 020 7566 4215 m: 07917 422 485 e: firstname.lastname@example.org
Antoinette Huka, Communications Officer
t: 020 7566 4217 m: 07825 679 462 e: email@example.com
Notes to editors:
R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners.
R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals.