Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, if she will review pre-packaged administration deals and make an assessment of the potential merits of preventing directors of a failed company becoming directors of the new company in cases where pension liabilities are passed onto the Pension Protection Fund.

The government has recently carried out a review of the impact of voluntary industry measures introduced in 2015 to improve confidence in pre-packaged sales in administration. The review will inform a decision on whether further regulation is required where a business is sold via a pre-pack sale to a person connected with the old company. We expect to publish the outcome of the review shortly.

As part of the review the Government liaised with the Pension Protection Fund, which made clear in its response to concerns raised by the Chair of the DWP Select Committee, that it does not fundamentally take issue with pre-packs but where there are concerns, these are referred to The Pensions Regulator for investigation.

The government already has robust measures in place to prevent directors of insolvent companies who are guilty of poor behaviour from taking part in the management of companies in the future. When a company enters a formal insolvency procedure, such as administration, the insolvency practitioner has a legal duty to report to the Insolvency Service on the conduct of the directors and where wrongdoing is identified, action can be taken to disqualify them for up to 15 years.

The government response to the 2018 White Paper “Protecting Defined Benefit Pension Schemes” proposes additional powers for The Pensions Regulator with a tougher approach to the minority of employers whose irresponsible behaviour does put pension schemes at risk.