ABI: Let

ABI: Let’s learn the lessons from ‘pre-packs’ and get company voluntary arrangements right

ABI: Let’s learn the lessons from ‘pre-packs’ and get company voluntary arrangements right

Responding to the Insolvency Service’s consultation on Company Voluntary Arrangements, Encouraging Company Rescue, Nick Starling, the ABI’s Director of General Insurance and Health, said:

“The ABI supports effective measures to ensure viable businesses remain afloat, and Company Voluntary Arrangements (CVAs) are a good way of achieving this for many struggling companies. We support a moratorium against creditor action, giving businesses vital breathing space while they develop a rescue plan for their creditors, and the extension of CVAs to medium and large companies. These measures should reduce the number of companies that are attracted to ‘pre-pack’ administrations in the future.

“Allowing companies to abuse the pre-pack system has damaged the reputation of the insolvency industry. It is essential that any new regime for CVAs is appropriately supervised and the process is both transparent and fair to all creditors.”

“Our main concern with pre-pack administrations is that often suppliers are trading blindly with a company that knows it’s about to enter into a pre-pack right up until when the deal is done. Suppliers with trade credit insurance will be covered for their losses, but the lack of transparency leaves insurers facing an unlevel playing field and uninsured suppliers out in the cold.”

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Notes for Editors

1. Enquiries to:
Jonathan French 020 7216 7392 (Mobile: 07958 330 480)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)

2. The ABI’s response to the Insolvency Service’s consultation on Company Voluntary Arrangements is available on the ABI web site, www.abi.org.uk.

3. The ABI is the voice of the insurance and investment industry. Its members constitute over 90 per cent of the insurance market in the UK and 20 per cent across the EU. They control assets equivalent to a quarter of the UK’s capital. They are the risk managers of the UK’s economy and society. Through the ABI their voice is heard in Government and in public debate on insurance, savings and investment matters.

4. An ISDN line is available for broadcasts.

5. More news and information from the ABI is available on our web site, www.abi.org.uk.