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

To ask Her Majesty’s Government whether they will review pre-pack administration, in the light of reports that the system is being abused in relation to creditors and commercial property owners.

In 2014, the independent Graham Review into pre-pack administration commissioned by Government found that pre-packs were a useful business rescue tool but that there was evidence of less successful outcomes where the pre-pack sale was to a connected party. A voluntary, industry-led package of reforms to pre-pack administration based on the Graham Review’s recommendations commenced in November 2015.

The Small Business, Enterprise and Employment Act 2015 created a power for Government to make regulations to impose conditions on property sales to connected parties in administration (including via a pre-pack). This power expires in May 2020. Government will assess the impact of the voluntary package of reforms and consider whether further regulation is needed prior to the power’s expiration.