Pre-pack administrations: How do firms use them and why the controversy?

Pre-pack administrations: How do firms use them and why the controversy?

Interview with the Leicester Mercury

A few weeks ago the Leicester Mercury asked some business owners about pre-pack administrations. My response was a little “strong”

“This whole thing of pre-pack administration so annoys me that if any of my suppliers did this I’d never use them again. I’ve had clients do this to me in the past, owing me an amount of money that meant my company made a loss that year

In my opinion pre-pack should be made illegal or the debts for the company being closed down should follow the owners/directors around until they are paid”

Last week I was contacted by Ian Griffin, the Business Editor at The Leicester Mercury, and asked more on the subject. Yesterday his article was published and I featured heavily

“Trevor Wood was left frustrated after his website design business made a loss a few years ago. Nothing unusual there, you may say, thousands of small firms struggle to make ends meet on an annual basis.

However, his business would have made a profit if it wasn’t for the £2,000 of bad debt from a client which had gone bust.

What was particularly galling was this client then set up again using a different business and doing exactly the same activity.”

There’s more – read it online here or view the PDF of the printed version: Pre-pack administrations: How do firms use them and why the controversy?

What do you think? Although pre-pack administration is legal, is it ethical? Should it be made harder to use a pre-pack? Should directors of companies that use pre-pack be made more accountable? What can be done to protect the people and companies who are left holding unpaid debts?

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Pre-pack administrations: How do firms use them and why the controversy?
Article Name
Pre-pack administrations: How do firms use them and why the controversy?
Description
"Trevor Wood was left frustrated after his website design business made a loss a few years ago. Nothing unusual there, you may say, thousands of small firms struggle to make ends meet on an annual basis. However, his business would have made a profit if it wasn’t for the £2,000 of bad debt from a client which had gone bust. What was particularly galling was this client then set up again using a different business and doing exactly the same activity."
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Network Midlands Ltd
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