Failed print group Polestar also achieved further notoriety in the report – there was only one company acquired in a pre-pack by a connected party that subsequently entered another insolvency process, and that company was Polestar. Its pre-pack sale to financier Proventus Capital Partners in March 2016 was given a green light ‘not unreasonable’ opinion by the Pre-Pack Pool’s reviewer.
“The Polestar situation did not add credibility to the process in any way,” BPIF chief executive Charles Jarrold told PrintWeek.
During the period from 1 November 2015 to 31 December 2016 there were 188 pre-packs involving a connected party, and of these just 28% were referred to the body.
There were 371 pre-packs in total, out of 1,689 business administrations.
The Pre-Pack Pool report states: “Just over one-in-four eligible pre-packs were referred to the Pool in its first 14 months, which, while a lower proportion than expected, is still encouraging for a new, voluntary step in a long-established insolvency procedure.”
Jarrold said the federation’s continuing support was contingent on greater future engagement with the Pool. “We support it but the percentage of referrals is too low, so our support is conditional. We are working with them on an action plan and we will be talking to other stakeholders in the pool.”
The BPIF is one of 10 bodies in the oversight group.
“Engagement needs to be increased substantially for the process to be considered worthwhile,” he added. “Creditors have a really important role in this, as the report states, and we strongly urge creditors to get much more involved. We need to all work together to get transparency and credibility.”
Responsibility for using the Pool is voluntary and rests with the connected party purchaser, not with the insolvency practitioner involved or with creditors. The Pool’s report notes: “The insolvency profession and creditors have important roles to play in ensuring connected party purchasers are informed of the option to use the Pool and putting pressure on them to do so.”
Although the data on historical pre-packs is limited, compared with the 2010 and 2011 data that are available, the overall number of pre-packs and connected party pre-packs were described as “lower than might have been expected”, which could indicate that greater scrutiny is having some effect.
Philip King of the Chartered Institute of Credit Management, one of the other stakeholders, said: “The progress to date has been encouraging but the laudable aims of the Pool will only be realised if the Pool is more widely promoted.”
The Pre-Pack Pool came into existence in 2015, following the 2014 Graham Review into pre-pack administrations.
Pre-packs, and in particular connected party pre-packs, have proved controversial in the printing industry
Pre-Pack Pool reviewers can give three opinions: the case for the pre-pack is not unreasonable; the case is not unreasonable but there are minor limitations in the evidence provided; or the case is not made.
Of the 53 transactions reviewed during the period, 34 were given the green light, 13 received the ‘minor limitations’ opinion, and for six the case was ‘not made’.
