The Government has revealed plans to tighten rules around pre-pack administrations, although the British Property Federation (BPF) says the proposals don’t go far enough. The package of proposed reforms, announced by business minister Ed Davey, will require insolvency practitioners to notify creditors in advance of a “phoenix pre-pack” - where a business is put into administration and then sold to a connected party, which can be the company’s directors - and allow them three days to object. Davey said: “I want to make sure that creditors have a fair chance to have their voice heard. I also want to enable others to scrutinise such transactions after the event to ensure that deals being struck are fair in the circumstances.” But the BPF said this would still not give landlords sufficient time to scrutinise phoenix pre-packs. The group wants the notice period to be extended to one week, “given the extent of the examination of the business that would have to occur during that period”. Davey also announced measures to make pre-packs more transparent, including a requirement for insolvency practitioners to serve a SIP16 notice – explaining why a pre-pack is the best option for creditors – at the time of the administration rather than following it. Insolvency practitioners must also post SIP16 information at Companies House under the proposal. BPF assistant director James Anderson said: “Pre-packs have a place in the armoury of the insolvency practitioner as they are proven to rescue distressed businesses. "What landlords absolutely do not want to see is the manipulation of a business rescue system for companies’ commercial gain. The system is most open to abuse in pre-pack sales to connected parties – sales that often occur with limited or no marketing of the business, at speed, and with the sale presented as a fait accompli to creditors. “The announcement takes steps to improve the system for creditors, which is welcomed. However, more time should be given to creditors for them to analyse pre-pack deals to connected parties. The three-day period is not sufficient in our view, and should be extended to one week. “We are pleased to see the Government take steps to ensure that information on pre-pack sales is provided to creditors in a timely manner and welcome the proposal to require IPs to serve SIP16 information on creditors at the same time as issuing administration documents. “Many IPs already do this, however, and in order to provide maximum security to creditors, the SIP16 should be placed on a statutory basis which will reach out to those operators that flout the rules.” A number of operators in the leisure and hospitality sector have been placed in pre-pack administration in recent years, including Regent Inns, Herald Inns and the restaurant business of high-profile chef Tom Aikens.