A report into the new SIP 16 guidelines, which came into force in January 2009, stated that there was "no evidence to suggest that the pre-pack process is being systematically abused by directors to materially disadvantage creditors".
However, less than two-thirds of the reports submitted to the organisation were compliant with the information disclosure requirements under the new guidelines.
The report focuses on the first six months of operation of SIP 16 and concludes that only limited data is available regarding directors' conduct as "there is a period of time between the onset of any administration and the conclusion of an investigation into the directors' conduct."
Even so, it claimed that, based on the available information, there was no indication that misconduct was more prevalent in pre-packs than in other administrations.
Peter Sargent, president of R3, the trade body for insolvency practitioners welcomed the report.
"Despite popular concerns about pre-packs being a ‘stitch-up’, it is clear from these findings that there is no systematic abuse of the procedure as far as Insolvency Practitioners are concerned," he said.
"Pre-packs are a very misunderstood insolvency tool and the benefits - for example, the numbers of jobs saved - are often lost in concerns over the impact on unsecured creditors. In order to build more confidence in the procedure, it’s vital that any misuse is weeded out and dealt with appropriately."
The report made three recommendations: It said that insolvency practitioners could do better in the timing of SIP 16 reports; improve the reporting of valuations and marketing; and fully disclose any connection between the failed company and the purchaser.
According to the report, one of the common areas of weakness in pre-pack sales is the failure to provide full details of the marketing exercises taken and valuation of the business. It added that this was of "particular concern".
It said that reports should be sent to creditors upon a completion of the sale, adding: "In a minority of cases, insolvency practitioners are not sending out information in a timely manner, which we regard as unacceptable".
And the report stated that failure to reveal connections between purchasing companies and administrated business "may give rise to the perception that the directors and insolvency practitioner have colluded to withhold this information from creditors, with a consequent loss of confidence in the integrity of the sale and the insolvency regime as a whole".
A further report into SIP 16 is due to be published in early 2010.
