The Insolvency Service have just issued a special edition Dear IP which provides further guidance on SIP 16. It should be appearing on the Insolvency Service website shortly.
The key points are as follows:
1. In all but the most exceptional of cases, SIP 16 information should be sent to creditors within 14 days of the completion of the pre-pack. Information disclosed should provide the detailed explanation and justification required by SIP 16 – bullet point descriptions are insufficient!
2. More detail is required of the insolvency practitioner’s initial introduction and his involvement prior to appointment and any marketing activities conducted prior to the sale.
3. Valuations need to be disclosed with sufficient detail for creditors to understand the values placed upon the various categories of assets. If no valuation has been obtained, an explanation needs to be given as to why not.
4. The consideration for the sale needs to be broken down by asset category and should correspond to the categories in any valuation report. When there is a significant difference between the valuations and realisations an explanation should be given. If any part of the consideration is deferred the timescale and structure of future payment, must be given.
It is clear that the Insolvency Service is taking SIP 16 seriously and a number of practitioners have faced censure as a result of non-compliance.
It's fair to say that the approach of the Insolvency Service to SIP 16 has been unpopular with regulators. It has been pointed out, for example, that its prescriptive nature may cause IPs to focus on completion of a checklist, rather than a definitive narrative statement as to what happened and why.
Nonetheless, with prepacks increasingly common, especially in larger cases, it's clear that the spotlight isn't being turned off; indeed, it's quite the reverse.
How much feedback have you had from stakeholders on your SIP 16 reports? Any comments from regulators or The Insolvency Service?