What we do

Pre-packaged administration

A pre-pack is a fast track administration that avoids a failing business being sold on the open market, with all the attendant problems this normally entails.

Instead, an insolvency practitioner lines up a purchaser in advance to take over the business, or parts of it, with the company going into administration simultaneously. This method maximises the realisations from the estate as it avoids any loss of value from deterioration in the goodwill of the firm.

Pre-packs work best for the secured creditors of a business on sale or administration. Unsecured creditors (including landlords) often have limited redress when the unwanted parts of a failing business are dissolved, following the sale of the business to the 'new company'. For landlords, it is often the case of quality first, with the 'good' profitable assets being taken into the new vehicle, and the 'least' profitable secondary assets being dropped.

Irrespective of whether assets are taken forward or not, we have concerns regarding the lack of clarity in the process and the difficulties in challenging a pre-pack.

Company voluntary arrangements

A CVA is a rescue procedure for a company in financial difficulties. It offers a legally binding agreement between a company and its preferential and unsecured creditors to repay a proportion of the company's liabilities, in a way that allows the company to avoid liquidation and continue as a going concern.

CVAs are a more acceptable face of insolvency, as they offer creditors to the insolvent company the opportunity to shape the CVA proposal and vote on it in a democratic manner. As a means of explaining the CVA process, we have produced a guidance paper which includes a level of information on how creditors can influence the fees charged by insolvency practitioners undertaking a CVA (see below).

There have been occasions where 'rescued' businesses have gone on to expand and be successful, at the expense of the creditors, some of which are landlords. While our members are keen to do their bit to protect jobs and keep shops and offices open, they also have a duty to protect the interests of their own shareholders. In addition, landlords are sometimes unable to make concessions because of their obligations to their banks and other occupiers.

Supporting a struggling business at the expense of its creditors risks spreading financial problems from businesses that might have suffered from poor management, to businesses that are healthy and well managed.

Pre-packs

We continue to monitor the market for 'legitimate use' and 'abuse' cases of pre-pack administrations, and will be vocal where landlords have been genuinely 'abused' by the pre-pack process.  We have responded to a number of consultation documents on insolvency, from government departments such as the Office of Fair Trading and Insolvency Service.

We responded to the Insolvency Service's Statement of Insolvency Practice (SIP)16 with the BPF SIP 16 questionnaire, which is designed to assist landlords obtain information from administrators following a pre-pack administration. We have also produced a list of key insolvency contacts at landlord organisations to help administrators get in touch with the relevant people.

We have also produced a consultation response to the Insolvency Service consultation 'Improving the transparency of, and confidence in, pre-packaged sales in administration.'

CVAs

We have published a BPF Guide to CVAs, that sets out the basics on CVAs and what they involve. We have been very successful in putting our views on CVAs across in the media. We have also represented landlords' views on CVAs to government departments and the representative body for insolvency practitioners, R3.

The Insolvency Service recognises us as a stakeholder to be consulted on plans to reform the insolvency system, and we were successful in preventing a potentially damaging proposal to reduce the security of landlords' rental deposit guarantees by enabling super priority debt to be raised by insolvency companies. Likewise, we put forward the landlords' views on CVAs to a consultation run by the Insolvency Service.

We are continuing to discuss these issues with the regulatory bodies and continue to monitor the market for 'legitimate use' and 'abuse' cases of CVAs and pre-pack administrations, being vocal where we believe landlords have been genuinely 'abused' by the process.