Pre-packs and SIP 16 March 2010

Transcription

1 Pre-packs and SIP 16 March 2010

2 Introduction Pre-pack Administrations have been the subject of much media and political interest in recent times, as some creditors accuse them of being a suspicious procedure open to abuse. Statement of Insolvency Practice 16 (SIP 16) was introduced in January 2009 to increase transparency surrounding this insolvency tool. It has also been interpreted as a move to address and alleviate concerns about the way pre-packs are operating and to allay creditors fears about whether they are being used in appropriate circumstances. The Insolvency Service has been monitoring SIP 16 and their latest review of Insolvency Practitioners compliance with SIP 16 reports during 2009 will be available shortly. In advance of this, R3 has conducted and commissioned research to find out more about practitioners and regulatory bodies experiences of pre-packs and the monitoring process over the last year. What does R3 think of pre-packs? Despite the criticisms the procedure has received from parts of the unsecured creditor community, R3 believes that prepacks are a very useful, but much-misunderstood, insolvency tool. Although we appreciate that there are concerns about pre-packs, their significant advantages - such as retention of jobs and better returns to secured and unsecured creditors - are often lost in the debate over their perceived impact on unsecured creditors. What does R3 think of compliance with SIP 16? Available information suggests that the vast majority of Insolvency Practitioners are complying with SIP 16, while only a tiny minority are not: The Insolvency Service s own figures for the first half of 2009 state that just 3% of cases were referred to practitioners regulatory bodies in the first six months of SIP 16 s operation (and that was before the Insolvency Service issued clarifying guidance to help practitioners understand what the Service requires from SIP 16 report). R3 s membership survey reviews the first twelve months of SIP 16 s operation and finds that just 1.5% of Insolvency Practitioners who carried out a pre-pack in the last twelve months say their report was referred to their regulatory body. Once a report has been referred to the regulatory body (Recognised Professional Bodies or RPBs), the body may - and have in some instances - conclude that there is no case to answer, so the percentage is likely to be even smaller. R3 s research among three of the seven RPBs finds that only one RPB has received a case from the Insolvency Service since SIP 16 s introduction. The three cases that were referred to this RPB resulted in two warnings and one finding of no case to answer. Meeting the requirements of SIP 16 is undoubtedly important, but SIP 16 is much more than an exercise in form filling. We must not lose sight of the fact that SIP 16 was designed to engender better pre-packs, encourage IPs to make sure that any pre-pack they carry out can be explained and justified, and promote confidence in the procedure. Practitioners believe that SIP 16 has gone a long way to achieving this over-arching aim. R3 s recommendations 1. The Insolvency Service should use appropriate terminology when reporting on SIP 16 to avoid encouraging misconceptions over compliance levels 2. The Insolvency Service should provide more detail on the level of competence and training of officials checking SIP 16 reports, in order to ensure they are sufficiently qualified to do the job 3. The Insolvency Service should actively support the profession by making available information that would help practitioners comply better with SIP 16 - for example, the number of reports that are found non compliant under each of the categories identified in the SIP 4. Breaches of SIP 16 should be treated with appropriate severity 5. Confidence should be encouraged through increased Insolvency Service enforcement activity in other areas, such as disqualification of blameworthy or incompetent directors Overall, it is important to remember that SIP 16 has only been in operation for just over a year, and the clarifying guidance was only issued five months ago. As with any new procedure it will take time before practitioners fully appreciate how the Insolvency Service wishes them to draft their SIP 16 reports. On the whole, Insolvency Practitioners have demonstrated a real willingness to adhere fully to SIP 16, and we expect compliance to rise over the next few years as understanding of the process grows. Key information What is a pre-pack? A pre-pack is a deal for the sale of an insolvent company s business and assets which is agreed in principle before the company goes into a formal insolvency process, usually administration. The in principle deal is usually worked out before an Insolvency Practitioner is appointed, and is then ordinarily executed rapidly once the appointment is made. Pre-packs and SIP 16 page 2 of 15

3 What are the advantages of pre-packs? Academic research has found that pre-packs retain more jobs than other business sales and they also tend to offer greater returns to secured and unsecured creditors. Because of the speed with which they take place, they are an excellent method of dealing with a failing company while preventing the whittling away of value, which increases an Insolvency Practitioner s chances of negotiating the best possible price for the business, therefore securing greater returns for creditors. Pre-packs tend to be particularly useful in companies where the assets are the people and the work in progress (e.g. advertising), where the value of a business would be destroyed by a different form of insolvency procedure. What are the main criticisms of pre-packs? The main criticisms that have been directed towards pre-packs is the accusation that the process is shrouded in secrecy, that there are too many phoenix pre-packs, and that creditors are not informed of the reasons for the pre-pack and whether best value has been achieved. SIP 16 has gone some way to addressing some of these concerns. What are concerns over phoenixes? A key criticism levelled at pre-packs by creditors is that the insolvent business can be sold back to the owners of the original business, but without liabilities (a phoenix company). But not all pre-packs are sold back to the original management or a connected party - case study estimates put the figure at about two thirds of pre-pack cases. More importantly, the sale of a business back to connected parties is not exclusively a feature of pre-packs. Academic research has found that in 52% of all standard business sales the business is sold back to connected parties, this figure is 59% in pre-pack administrations. In cases where a business is sold to the original owners, concerns are not quite as clear-cut as they first seem. Faced with the decision between selling the business to a connected party or winding the company up, the best return to creditors is usually achieved by selling the business rather than selling its assets on a break up basis. Selling the business on is also preferable in terms of the numbers of jobs and customers that are retained. In some cases there may be very strong commercial reasons for selling the business back to connected parties as they might be the only people who are interested in buying it or the only people with the necessary skills to run it. What is SIP 16 and why did it come about? To allay concerns about pre-packs, the Joint Insolvency Committee, with involvement from the Government, looked to Statements of Insolvency Practice. These SIPs set out required practice in a variety of aspects of insolvency, aiming to harmonise Insolvency Practitioners approach to a particular procedure. SIP 16, which relates to pre-packs, was introduced in January SIP 16 requires Insolvency Practitioners to provide creditors with a timely and detailed report containing an explanation and justification as to why a pre-pack was undertaken, and to demonstrate that the Insolvency Practitioner acted with due regard for the creditors interests. A significant requirement of the SIP is that Insolvency Practitioners provide creditors with a set list of information, including details on the alternative courses of action that were considered by the administrator, with an explanation of possible financial outcomes, and reasons why it was not appropriate to trade the business or offer it for sale as a going concern. How are the Government monitoring SIP 16? In January 2009, the Insolvency Service announced that they would look at all SIP 16 reports to ensure that Insolvency Practitioners are providing sufficient information to creditors. In any cases where they believe an Insolvency Practitioner has not fulfilled their obligations, they announced their intention to raise it with the practitioner s regulator (one of the Recognised Professional Bodies, known as RPBs). Are Insolvency Practitioners complying with SIP 16? The Insolvency Service started to monitor reports to creditors in January 2009, and their report into the first six months of its operation found that pre-packs give better information for creditors at an early stage and a greater degree of transparency. The report also revealed that just 3% of Insolvency Practitioners did not materially comply with the SIP, demonstrating that there is no systematic abuse to the detriment of creditors. The six-month report stated that 65% of reports were fully compliant with the SIP, while the remainder were categorised as falling short of full compliance. This categorisation led many press and political commentators to accuse one third of the industry of failing to comply (e.g. Pre-pack bankruptcy accountants mocking rules the Times, 21st July 2009). In fact, the remaining 35% of cases included a range of outcomes, including cases that had simply not yet reached their conclusion (e.g. cases in which the Service has written to an Insolvency Practitioner asking for some more information). Only 3% of cases were referred to the practitioner s authorising body. Clarifying guidance In October 2009, following the six-month report, the Insolvency Service issued guidance on the standards that they use to assess the reports so that practitioners would be better placed to try to adhere to them. The Insolvency Service is expected to release its latest findings into the first year of SIP 16 s operation in March This report will encompass the period of time from the launch of SIP 16 (January 2009) to when greater clarity was provided on the expectations of SIP 16 reports (October 2009), and beyond (to December 2009). It is unclear whether the Service will apply the standards detailed in the October guidance to SIP 16 reports that were produced before that time i.e. applying the standards retrospectively. Pre-packs and SIP 16 page 3 of 15

4 Headline findings To understand better the operation of pre-packs, SIP 16 and the monitoring process, R3 commissioned research agency ComRes to undertake a survey of R3 members. Between the 4th and 23rd February 2010, ComRes conducted an online survey of R3 members in the UK. The survey was sent to 2082 R3 members, of whom 404 responded. This means that approximately one in five of those eligible to take part did so (19%). All responses are anonymous. Just over half of Insolvency Practitioners who work on corporate insolvency have carried out a Pre-pack Administration in the last twelve months. Of those Insolvency Practitioners who have carried out a prepack, most are likely to have dealt with just one in that period. R3 members were asked to identify a pre-pack they have carried out in the last 12 months and to answer a number of questions relating to the features of that case: o Case studies identified pre-packs in a variety of sectors (predominantly retail and manufacturing) and in all areas of the UK. o Members were able to provide details about the number of jobs at the company in question before and after the pre-pack took place (i.e. how many were at risk and how many were retained). In 116 out of a total of 169 cases, all of the jobs at the company were retained. o Looking at all of the case studies together, 17,762 people were employed before the pre-pack took place and 15,980 were retained at the end of the process (90%). o In 65% of cases, the previous business owners remained in charge of the new pre-packaged company. o The main reason for carrying out a pre-pack is because the procedure could achieve a better return to creditors. The second reason given is that the sale needed to be fast; followed by it was the best chance to save the workforce. The lack of alternatives also plays a key role in deciding to do a pre-pack. The overwhelming majority of Insolvency Practitioners who have carried out a pre-pack in the last twelve months believe that they have complied with the guidelines set out in SIP 16. Of the Insolvency Practitioners who had done a pre-pack in the last twelve months, just over one in ten (13%) have been contacted by the Insolvency Service about shortcomings in their SIP 16 report. Once the Insolvency Service contacts an Insolvency Practitioner, there are numerous outcomes: o Half of the Insolvency Practitioners who were contacted by the Insolvency Service say that they appreciated that they needed to make changes to their report, which they have since done. o 19% say the Insolvency Service had actually made a mistake the information the Service asked for was actually included in the report. All in all, just 1.5% of Insolvency Practitioners who carried out a pre-pack in the last twelve months say their report was referred to their regulatory body. Once a report has been referred to the regulatory body, the body may conclude that there is no case to answer, so the percentage may be even smaller. The vast majority of Insolvency Practitioners think the Dear Insolvency Practitioner guidance issued in October 2009 was clear, but the majority feel that a pro forma or some examples of compliance or non compliance should have been included by the Insolvency Service, presumably because this would enable them to better understand the Insolvency Service s expectations of their reports. The majority of Insolvency Practitioners have a high regard for SIP 16 s capacity to encourage them to do better prepacks. In order to understand better the Insolvency Service s contact with the RPBs and any action following referrals, R3 also invited RPBs to respond to an anonymous survey. Of the seven RPBs, three responded: Two of these RPBs reported that have not received any SIP 16 reports from the Insolvency Service, since January 2009 to the present time. One of the RPBs received three SIP16 reports in 2009, and a further two since then. Of the reports received in 2009, the Insolvency Service highlighted concerns over two of the specific disclosure requirements: the timing of provision of SIP 16 information; and an explanation and justification of why a pre-pack sale was undertaken. None of these cases have been referred to the relevant disciplinary committee, but two have led to a warning (falling short of disciplinary action) and it was found that there was no case to answer for the final one. Pre-packs and SIP 16 page 4 of 15

5 R3 membership research findings Have you carried out any pre-packs in the last 12 months? Just over half of Insolvency Practitioners who work on corporate insolvency have carried out a pre-pack in the last twelve months, while 47% have not. Base: All Insolvency Practitioners who work on corporate insolvency How many pre-packs have you done in the last 12 months? Practitioners who have carried out a prepack in the last twelve months say they are most likely to have done just one during that time (i.e. one is the mode). Base: All Insolvency Practitioners who have carried out a pre pack in the last 12 months Pre-pack case studies Members who had carried out a pre pack in the last 12 months were asked to provide a few details about one case. Full case studies are appended. The following two charts are based on coded data. They are best read as indicative rather than definitive. In which region was the company based? Base: Insolvency Practitioners who provided a case study Which sector did the company operate in? Base: Insolvency Practitioners who provided a case study Pre-packs and SIP 16 page 5 of 15

6 Pre-pack case studies In 169 of the 202 case studies provided, members were able to provide details about the number of people employed at the company before and after the pre-pack took place. In 116 cases, all of the jobs at the company were retained. Looking at all of the case studies together, 17,762 people were employed before the pre-packs took place. 15,980 of employees were retained at the end of the process (that equates to 90% of jobs overall). Did the previous business owners remain in charge of the new pre-packaged company? In 65% of cases, the previous owners remained in charge of the new company; in 35% they did not. Base: All Insolvency Practitioners who provided a case study Why was the pre-pack the best option? Base: All Insolvency Practitioners who provided a case study In the case studies provided, the main reason for carrying out a pre-pack was the return to creditors. The second most prevalent reason is that the sale needed to be fast; and this is followed by it was the best chance to save the workforce. These two reasons may be connected (i.e. the sale needed to be fast in order to retain staff - key assets of many businesses). The lack of alternatives also played a key role in deciding to do a pre-pack, with the reasons it was the only alternative to liquidation and re-financing was not an option as there was little finance available featuring prominently. The least popular reasons include the deal was agreed before I was appointed and pre-packs are an easier option for me as an Insolvency Practitioner. In R3 s quarterly membership survey in April 2009, R3 members were asked to provide a case study of a recent pre-pack they had carried out. The following chart shows their responses at that time, comparing those responses to their recent case study. Delivering returns to creditors was a more popular reason this time than last year. With this one exception, the reasons for doing a pre-pack are broadly very similar almost a year on. Pre-packs and SIP 16 page 6 of 15

7 It is encouraging to note that the most cited reason for carrying out a pre-pack is that the process offers greater returns to creditors after all, maximising returns to creditors is what Insolvency Practitioners are required to do; it is their central purpose. Membership survey: a focus on SIP 16 The following questions were answered by practitioners who said that they had carried out a pre-pack in the last twelve months. Do you think that you comply with the SIP 16 guidelines? The overwhelming majority of Insolvency Practitioners believe that they comply with the guidelines set out in SIP 16. All Insolvency Practitioners who have carried out a pre-pack in the last 12 months Have you been contacted by the Insolvency Service, saying that your SIP 16 report had shortcomings? Just over one in ten Insolvency Practitioners (13%) say they have been contacted by the Insolvency Service about their SIP 16 report. The vast majority have not been contacted, presumably because their reports have been deemed compliant. All Insolvency Practitioners who have carried out a pre-pack in the last 12 months Pre-packs and SIP 16 page 7 of 15

8 What was the outcome of this contact with the Insolvency Service? Base: All Insolvency Practitioners who have been contacted about a pre-pack in the last 12 months In half of the cases in which Insolvency Practitioners have been contacted by the Insolvency Service, the Insolvency Practitioners appreciated that they need to make changes to their report, which they have since done. In 19% of cases, the Insolvency Service had actually made a mistake. These kinds of cases have been categorised by the Insolvency Service as falling short of full compliance. 13% of Insolvency Practitioners who have done a pre-pack in the last twelve months say that the Insolvency Service contacted them about shortcomings in their report. Of these, 12% say their report was referred to their regulatory body. All in all, just 1.5% of the total number of Insolvency Practitioners who carried out a pre-pack in the last twelve months say their report was referred to their regulatory body. One practitioner provided more information about contact with the Insolvency Service: The Insolvency Service made a complaint to my monitoring body on the same day they wrote to me, i.e. they didn t wait for a reply to the points they had raised. In fact they haven t even acknowledged receipt of my reply. My monitoring body have decided there is no case to answer so I am unsure what was achieved other than lost time and money. I also feel I am less likely to do a pre-pack in future with a small company. Dear Insolvency Practitioner guidance was issued on the 27th October How clear do you think it was? Base: All Insolvency Practitioners who have carried out a pre-pack in the last 12 months The vast majority of Insolvency Practitioners think the Dear Insolvency Practitioner guidance was clear. Bearing in mind the apparent clarity this guidance has given, it will be interesting to see whether there has been increased compliance (as defined by the Insolvency Service) following its issuance in October Pre-packs and SIP 16 page 8 of 15

9 Do you think the IS should have included a pro forma / examples of compliance and non compliance? The majority of Insolvency Practitioners feel that a pro forma or some examples of compliance or non compliance should have been included by the Insolvency Service, presumably because this would enable them to better understand the Insolvency Service s expectations of their reports. Base: All Insolvency Practitioners who have carried out a pre-pack in the last 12 months The original intention was that SIP 16 should influence behaviour and discourage inappropriate pre-packs by focusing the minds of Insolvency Practitioners on how to conduct things in the pre-appointment period. On this basis, do you think that SIP 16 is successful in encouraging you to do better pre-packs? Insolvency Practitioners seem to have a high regard for SIP 16 s ability to encourage them to do better pre-packs. Base: All Insolvency Practitioners who have carried out a pre-pack in the last 12 months R3 s recommendations The Insolvency Service should use appropriate terminology when reporting on SIP 16 to avoid encouraging misconceptions over compliance levels The Insolvency Service should be clearer about the terminology they use to describe their SIP 16 findings. Using terms like failure to comply and falling short of full compliance leads the media, politicians and other readers to assume that the cases under this bracket simply do not comply with SIP 16. In fact, the cases under this bracket cover all manner of outcomes including unfinished cases, cases in which the Service has simply asked for more information, and possibly even cases in which the Insolvency Service itself has made a mistake. The terms falling short of full compliance or failing to comply should only be used to refer to completed cases in which an Insolvency Practitioner s disciplinary body has concluded that they have not complied with SIP 16. Mindful of how terms like these are generally understood, the Insolvency Service should not use them for cases in which more information has been requested or for cases that have not yet reached a conclusion. Until a case is complete, it should be described as pending. Using appropriate terminology is critical to achieving transparency and to ensure that readers are not encouraged to develop a distorted impression of the way SIP 16, and consequently pre-packs, are operating. We must not lose sight of the fact that SIP 16 was designed to engender better pre-packs and promote confidence in the procedure. By using ambiguous language, the Service s reports are at risk of encouraging misconceptions, and effectively scaremongering - thereby undermining the purpose of the SIP. The lack of finesse in the reporting terminology risks stymieing the development of confidence in pre-packs and should be addressed. The Insolvency Service s one year report encompasses the period of time from the launch of SIP 16 in January Pre-packs and SIP 16 page 9 of 15

10 2009 to October 2009 when the clarifying guidance was issued, and then the period from then until December It is unclear whether the Service will apply the October guidance standards to SIP 16 reports produced before this guidance was issued. R3 does not believe it is fair to apply these standards retrospectively, as practitioners would not have known at the time the standards by which they would later be judged. The Insolvency Service should provide more detail on the level of competence and training of officials checking SIP 16 reports, in order to ensure they are sufficiently qualified to do the job R3 finds it worrying that there are cases mistakenly referred to RPBs by the Insolvency Service (i.e. cases in which the Insolvency Practitioners report contains the requisite information which had been missed by the Insolvency Service). Practitioners have also expressed concern that officials checking the reports have a tick box mentality rather than a nuanced understanding of the issues involved in a case and therefore are not in a position to make a judgement on them. We would like the Insolvency Service to provide information on the level of commercial or insolvency experience/training the officials examining SIP 16 reports have, to ensure that they are sufficiently able to make a judgement on individual reports. If the Insolvency Service requires more information from a practitioner in a particular case, they should allow adequate time for the practitioner to get back to them before referring the case to the practitioner s RPB. This would avoid duplication of effort and crossed wires, and allow the practitioner a chance to provide the necessary information and clear up any misunderstanding. The Insolvency Service should actively support the profession by making available information that would help practitioners comply better with SIP 16 - for example, the number of reports that are found non compliant under each of the categories identified in the SIP The Insolvency Service should disclose the number of cases in which they think Insolvency Practitioners are failing to comply under each of the specific disclosure requirements set out by SIP 16 i.e. they should provide more detail on how many cases there are in which Insolvency Practitioners fail to comply because they are sending in their reports a week late or whether it is because they believe they are failing to explore alternative options to pre-packs etc. In their first report, the Insolvency Service unhelpfully refers to these instances using ambiguous and enigmatic phrases such as a minority or a small minority. If the industry is more aware of where it is perceived that they are going wrong, R3 believes they will be in a much better position to try to improve SIP 16 reports. Without this information, practitioners are tasked with trying to find a solution without knowing what the nature of the problem is. The Insolvency Service state that practitioners must comply with both the spirit and letter of SIP 16. The Service should be much clearer about what they mean by the SIP s spirit to ensure practitioners know what is expected of them. The Insolvency Service should continue to work with the industry to encourage compliance by helping R3 to develop a pro forma or examples of compliant reports so that Insolvency Practitioners can see what is expected of them. Breaches of SIP 16 should be treated with appropriate severity In cases where Insolvency Practitioners are found to be breaching SIP 16, R3 supports RPBs taking effective enforcement action. Effective and strong enforcement on the few Insolvency Practitioners that fail to comply fully with SIP 16 is critical to addressing and alleviating concerns about pre-packs. R3, as the trade body for Insolvency Practitioners, is fully supportive of RPB action to root out any rogues in the industry to ensure that the few do not give the many - and the profession as a whole - a bad name. Confidence should be encouraged through increased Insolvency Service enforcement activity in other areas, such as disqualification of blameworthy or incompetent directors Public confidence in pre-packs and other insolvency procedures would be considerably increased if the Insolvency Service took greater action against unscrupulous company directors. R3 understands, due to a lack of resources, not all reports from practitioners about the conduct of directors are investigated by the Insolvency Service. We believe that the Insolvency Service should investigate more cases referred to them and that there should be greater publicity for the cases the Insolvency Service successfully prosecutes. Pre-packs and SIP 16 page 10 of 15

11 Case studies: recent pre-packs Reasons for doing a pre-pack Region Sector Employees before pre-pack Jobs retained Did the previous business owners remain in charge of the new pre-packaged company? Sale needed to be fast It was the best chance to save the workforce It was the only alternative to liquidation It delivered greater returns to creditors Re-financing was not an option as there was little finance available The deal was agreed before I was appointed Pre-packs are an 'easier option' for me as an IP East Industrial Yes 3 East IT 6 2 No 3 East Printing No 3 East Restaurant 5 5 No East Anglia Leisure No East Anglia Motor under 10 All Yes East Anglia Suppliers of fresh produce Yes East Anglia Wholesaling No London Advertising 9 9 Yes 3 London Advertising Yes London Bathrooms Yes 3 London Recruitment Yes London Consultancy Yes London Design all Yes 3 3 London Direct Marketing Yes 3 London Estate Agency No 3 3 London Fashion Yes 3 London Fast Food No London Financial industry No 3 London Food Production No London Hair treatments <10 <10 No 3 London IT 8 8 Yes London IT Yes 3 London Leisure Yes 3 London Media 12 8 Yes London Media 16 No London Media c.20 Most No London Media Yes London Office refurbishment No London Private Vehicle Hire No London Professional Practices Yes 3 London Publishing Yes London Restuarants / bars Yes London Retail Yes 3 London Retail clothing Yes London Services <10 All Yes 3 3 London Wholesaler Yes London Print Yes Outer London Advertising Yes Pre-packs and SIP 16 page 11 of 15

12 Reasons for doing a pre-pack Region Sector Employees before pre-pack Jobs retained Did the previous business owners remain in charge of the new pre-packaged company? Sale needed to be fast It was the best chance to save the workforce It was the only alternative to liquidation It delivered greater returns to creditors Re-financing was not an option as there was little finance available The deal was agreed before I was appointed Pre-packs are an 'easier option' for me as an IP Kent Entertaining 200 Not yet known Yes 3 South Construction 6 6 Yes 3 South IT Yes 3 South Manufacturing No 3 3 South Printing No Essex Legal Yes 3 Essex Packaging 6 6 Yes Essex Essex Rail infrastructure/ contracting Wholesale clothing retailer South East Care No No Yes 3 3 South East Engineering Yes South East Food and drink No South East Haulage Yes South East Industrial cleaning 8 8 Yes South East Installation 5 5 Yes 3 South East IT 5 5 No 3 3 South East Logistics Yes South East Machine parts Yes 3 3 South East Manufacturing Yes South East Motor No South East Pubs Yes South East Retail No South East Furniture manufacture 15/20 15/20 Yes 3 3 South East Logistics No Midlands Construction Yes 3 Midlands Construction No Midlands Haulage 17 All Yes Midlands Leisure 5 5 Yes Midlands Metal manufacturing Yes Midlands Nightclub 6 6 No 3 3 Midlands Packaging No 3 Midlands Retail 0 0 Yes Midlands Retail Yes 3 Midlands Training 5 5 Yes East Midlands Asbestos consultancy Yes East Midlands Marketing 8 8 No 3 East Midlands Retail No West Midlands Automotive engineering Yes 3 West Midlands Ceramics No Pre-packs and SIP 16 page 12 of 15

13 Reasons for doing a pre-pack Region Sector Employees before pre-pack Jobs retained Did the previous business owners remain in charge of the new pre-packaged company? Sale needed to be fast It was the best chance to save the workforce It was the only alternative to liquidation It delivered greater returns to creditors Re-financing was not an option as there was little finance available The deal was agreed before I was appointed Pre-packs are an 'easier option' for me as an IP West Midlands Education circa 100 All No 3 West Midlands Engineering Yes West Midlands Financial Services 15 5 Yes West Midlands Food Yes West Midlands Food Yes West Midlands Maintenance over 100 over 100 No West Midlands Manufacturing Yes West Midlands Manufacturing Yes West Midlands Manufacturing Yes West Midlands Manufacturing No West Midlands Manufacturing Yes West Midlands Manufacturing Yes West Midlands Manufacturing Yes West Midlands Manufacturing Yes 3 West Midlands Retail Yes 3 3 West Midlands Waste management Yes Herefordshire Service industry 7 7 No Lincolnshire Construction Yes 3 Berkshire Leisure South West Construction Yes South West Design Yes South West Electrical Yes South West Food Yes 3 3 South West Hotel Yes South West Manufacturing / retail 3 3 Yes 3 3 South West Marketing Yes 3 South West Printing Yes South West Printing No 3 South West Recruitment 7 7 Yes South West Retail No 3 South West Retail Yes South West Telemarketing Yes Worcestershire Security Products Yes Wales Motor Parts Retailer 5 5 Yes 3 3 North Wales Upvc company Yes South Wales Haulage Yes Yorkshire Construction 6 6 No Yorkshire Estate agent Yes 3 Yorkshire Law 5 2 No 3 Yorkshire Manufacturing No 3 Yorkshire Manufacturing No 3 Pre-packs and SIP 16 page 13 of 15

14 Reasons for doing a pre-pack Region Sector Employees before pre-pack Jobs retained Did the previous business owners remain in charge of the new pre-packaged company? Sale needed to be fast It was the best chance to save the workforce It was the only alternative to liquidation It delivered greater returns to creditors Re-financing was not an option as there was little finance available The deal was agreed before I was appointed Pre-packs are an 'easier option' for me as an IP Yorkshire Printing 9 8 No 3 Yorkshire Restaurant Yes Yorkshire Sport No Yorkshire and Humberside Yorkshire and Humerside Transport 4 4 Yes Manufacturing No North Electrical contractor Yes 3 Leeds Architects Yes North East Engineering Yes North East IT Yes North East IT-healthcare No 3 North East Leisure Yes 3 North East Recruitment Yes North East Retail Yes North East Sales Yes North East Travel No 3 North West Auto-motive products Yes North West Clothing Yes North West Computers 11 6 No North West Construction 5 5 Yes North West Consumer business wholesaler No 3 North West Distribution No 3 3 North West Electronics 8 4 No 3 3 North West IT Yes 3 North West Law No 3 North West Law firm Yes 3 North West Leisure Yes 3 North West Leisure/licensed Yes North West Manufacturing 0 0 No 3 North West Manufacturing No North West Motor Trade No North West Plant Hire No 3 North West Plastics manufacture No North West Retail Yes 3 North West Textiles Yes 3 3 North West Wholesale No 3 Scotland Advertising Yes Scotland Construction Yes 3 Scotland Retail 8 8 Yes Scotland Waste Management Services 8 8 No 3 3 Pre-packs and SIP 16 page 14 of 15

15 Reasons for doing a pre-pack Region Sector Employees before pre-pack Jobs retained Did the previous business owners remain in charge of the new pre-packaged company? Sale needed to be fast It was the best chance to save the workforce It was the only alternative to liquidation It delivered greater returns to creditors Re-financing was not an option as there was little finance available The deal was agreed before I was appointed Pre-packs are an 'easier option' for me as an IP London / Essex Law Firm Yes London and 3 other sites London and Liverpool London and Oxfordshire London and South East Meat wholesale No Manufacturing No 3 Recruitment Yes 3 Leisure Yes 3 National Leisure No 3 National Restaurants Yes National Retail Yes 3 3 National Retail approx 250 approx 200 Yes National Retail Yes National Retail / Mail order Yes 3 UK Education No UK Licensed retail 2,500 2,470 No 3 UK Retail menswear Yes UK Retail Yes Global Manufacturing 1,500 1,500 Yes Scotland and Europe Worldwide Manufacturing - automotive component Laminate tube manufacturing No 3 Nil - Holding Company 100% in subsidiaries No Pre-packs and SIP 16 page 15 of 15