Post by andrewholgate on Jan 29, 2014 14:39:06 GMT
This has been put together by Mark Wardrop ACA JIEB. He is our Operations Director and qualified Insolvency Practitioner.
The existence of the Administration regime in UK law and in particular the ability for a company to appoint an Administrator “out of court” in a “pre-pack” Administration process has arisen from a desire by previous governments to create a “rescue culture” for business in the UK and has been in general use for over 10 years. The rationale behind this rescue culture is that if a business can be financially and operationally restructured so as to be viable (profitable) going forward then it can continue to employ staff, pay its suppliers for ongoing supplies, invest in growth, etc etc and generally contribute positively to the economy, it is better for all than if the business is simply liquidated which will negatively impact the economy (redundant employees, loss of future business for suppliers etc). The rules governing pre-pack procedure are entirely focussed on ensuring that the ethical considerations which have been raised over the years (mainly concerning potential impact on unsecured creditors) are managed to the fullest extent possible, and Assetz Capital would only consider being involved in a transaction where all these rules and regulations are met.
Thanks for the clarification on pre-pack considering the current offering on your site.
IMHO whatever form they take and whatever principle they are governed by. Their (mis)use over the years has led me to believe they are an unethical solution.
I have (some) morals and personally i don't like making money at others expense and i think this is what the majority of others are also trying to convey.
Quite so. There were some similar aspects of the earlier west Wales hotel unfulfilled/withdrawn application several weeks ago that I felt squeamish about even though it was not a "pre-pack". Glad to know that other fellow lenders aren't keen on these sorts of arrangements.
By the way, I wonder what has happened to the welsh hotel. Was it not said that they were going to reformulate their application?
IMHO there are two issues with prepacks: 1/ For a business facing going down and with money owed to creditors (who may be 'nasty' banks or 'real' people eg low waged employees) then there's a simple choice between going down permanently or taking a prepack, in *both* cases debts are effectively written off but in the case of a prepack there is a chance of the business rebuilding itself and jobs and employment opportunities resume. As such a prepack must surely be a 'good' thing. 2/ For an unscrupulous/incompetent/unlucky business owner, the very existence of prepack presumably makes it quite attractive to rack up debts and then write them off, and that is a 'bad' thing.
Everyone will make their own decision but i don't think it's black or white nor that funding this one has directly or indirectly caused the earlier business failure - one could take a view that any buy-to-let loan (a popular one on assetz!) is unethical because it is making money out of those who have to rent because buy-to-letters have pushed prices up etc etc