Question

To ask the Secretary of State for Business, Innovation and Skills, what recent assessment he has made of the effect on (a) businesses affected by pre-pack insolvencies and (b) employees of such businesses of such insolvencies.

The University of Wolverhampton undertook research as part of Teresa Graham’s June 2014 review into pre-pack administrations. This found that returns to creditors from a pre-pack were slightly lower than from non pre-packed administrations.

The report also found that in about 60% of pre-pack deals all jobs were saved, and in a further 10% some jobs were saved. No data is available on the impact of the insolvency on employment at creditors of the company.

A voluntary package of reforms to pre-packs, as recommended by the Graham review, was launched on 2 November with support from the insolvency industry and creditor groups. The reforms are intended to bring greater transparency and improved creditor confidence in pre-packs, and especially those in which sales are to connected parties.