UK Pre-pack reforms: pause for thought in Australia?

On 31 March 2011, the UK Government announced new measures to regulate the use of pre‑packaged sales in administration. The announcement heralds a shift in regulatory attitudes towards pre-packs in the UK, which should give all local pre-pack advocates pause for thought when considering the merits of embracing the procedure in Australia. In the last edition of the Australian Insolvency Journal, an interesting article extolled the virtues of pre-packs and called for ‘legislative reform to embrace pre-packs’ in Australia. By way of reply (and in a spirit of constructive debate) this article respectfully contends that while pre-packs certainly have their place in preserving business value in certain circumstances, Australia should be careful not to sleepwalk into adopting a procedure which legitimises phoenixing at the expense of creditor confidence and participation in our insolvency regime.