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Alison Curry, head of regulatory standards and support at the Insolvency Practitioners Association, outlines what insolvency practitioners need to know about the new SIP 16.
Insolvency Service issues revised SIP 16
A revised version of the Statement of Insolvency Practice 16 (SIP 16) from the Insolvency Service, covering pre-packaged sales in administrations, will be effective from 1 November 2015. The SIP 16 has been revised to take into account the recommendations included in a recent independent report into pre-pack administration, and will apply UK-wide.
The main changes are the introduction of Teresa Graham’s ‘marketing essentials’ which mandate more extensive marketing of a business prior to a pre-packaged sale than might have historically been the case or, alternatively, obligate the insolvency practitioners (IPs) to explain why this was not conducted. Other significant changes include:
No, the SIP is substantially unchanged. The delay in issuing the SIP was necessitated by the need to time the issuing of the SIP with the pre-pack pool becoming operational.
There is certainly greater emphasis placed on marketing within the new SIP, but the requirement to market the business or explain the reasons for not having done so is not a new one. The new SIP provides greater clarity about what form marketing should ideally take, and therefore ought to assist IPs in understanding the expectations upon them.
The pre-pack pool is due to commence its operations on 2 November 2015.
The pre-pack pool will operate exclusively via a website. Prospective purchaser applicants submit information electronically and the case will be allocated on a rota basis to one of 20 pre-pack pool members. They will respond with their opinion, usually within 48 hours. The prospective purchaser will be asked to consent to that opinion being shared electronically with the administrator (or proposed administrator), if they are known at that time.
The pre-pack pool is currently finalising a detailed Q&A and guidance notes which will explain the mechanics in more detail—it is intended that the process is as straightforward as possible, in order to minimise costs and facilitate prompt turnaround. The Q&A is primarily aimed at applicants, but will be useful reading for IPs and we hope to include it in the next edition of our handbook.
Whenever there is a change in regulation, the most important thing for IPs and their teams is for them to fully familiarise themselves with the new provisions. SIPs are written by groups of practitioners, via the Joint Insolvency Committee, and are intended to guide IPs to best practice, not to trip them up. There is a lot going on at the moment, with various changes to insolvency legislation coming into force and we understand that. But the principles-based approach taken in recent SIPs should make compliance more straightforward in some respects, as the regulatory focus is on the qualitative substance, rather than the detailed form. I would urge IPs to ask themselves, if they were a creditor, what would they want to know in order to feel confident that the pre-packaged sale was in their interests? The SIP is clear in its ‘comply or explain’ methodology, and practitioners need to provide meaningful and transparent explanations.
The Insolvency Practitioners Association operates a regulatory and ethics helpline and we are happy to discuss issues of interpretation with our members. We cannot, however, provide advice about a specific case or advocate a particular course of action.
The pre-pack pool Q&As and guidance notes will also be helpful to practitioners in understanding the workings of the pool. While submissions themselves will not be subject to discussion, any administrative issues with the operation of the pool will be dealt with by pool administrators. There will be email contact details available via the website.
The operation of the pool is to be reviewed by its steering group on an annual basis and an annual report prepared and published. If IPs have any comments or suggestions to make about the operation of the pool, their input will no doubt be welcomed. We would be happy to receive any such reports from our members.
Yes. We took a conscious decision to delay the publication of the fourth edition in order to include the new SIP 16, as we wanted the handbook to be as relevant and useful as possible. We hope also to include the pre-pack pool Q&As. Additionally, the handbook will include the recently revised SIP 1 and, if it is available in time, the new SIP 9 concerning IP fees, so IPs will be bang up to date with extra-statutory regulation.
Interviewed by Julian Sayarer.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
If you are a LexisPSL subscriber, click the link below for further information:
What is a pre-pack administration sale?
Trading a company in administration—the office-holder's point of view
Insolvency Practitioners' Handbook 2014
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First published on LexisPSL Restructuring and Insolvency
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