Business secretary Vince Cable has led the push to take a closer look into exactly how pre-pack administrations are being used. The news that high-profile accountancy firm, RSM Tenon, has now been sold to Baker Tilly through a pre-pack, has brought up the urgency of this investigation once again.
It had been known for several months that Baker Tilly had an interest in RSM Tenon, but the eventual form of the sale came as a surprise. The company had all but backed off from the acquisition until the distressed nature of the business became clear, at which point Baker Tilly came back into the game and bought the business in a pre-pack administration deal.
We've often reported on the downsides of pre-pack administrations; the reduced level of access for prospective buyers is one of the crucial issues, along with the knock-on impact of reduced returns for creditors.
In the case of RSM Tenon, the buyers are not connected with the business. Hopefully this will provide the firm with a healthy second start, removing ties and any management issues that might have contributed to its difficulties in the past.
However, it can't be denied that the eventual form of the sale has taken many people by surprise and the increasing prevalence of this form of distressed business sale is delivering a pressing need for the government's investigations.
According to data from the Insolvency Service, one in four of the companies placed into administration during 2011 were done so using the pre-pack procedure and about four-fifths of the buyers of these firms were already connected to the companies in some way.
Mr Cable is still working towards his review of the pre-pack procedure and exactly how it is being used at the moment. Many people are hoping that his findings will result in a fairer approach for both creditors and business buyers. 
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