Pre-pack administration deals used to dump debt says ABI In its submission to the Business, Innovation and Skills Select Committee, the ABI wrote: "We think that the heart of the problem lies in the serious conflict of interest inherent in an insolvency practitioner devising a pre-pack sale in secret in conjunction with the directors and secured lenders of a failing company, and then immediately implementing that transaction as administrator with a duty to act in the best interests of all creditors." "Despite the professional and legal rules designed to prevent abuse, it is inevitable that a large proportion of pre-pack transactions will be structured to favour the owners of the business and their secured finance providers, who initially engage the insolvency practitioner and are privy to the design of the scheme, at the expense of unsecured creditors," the ABI stated. It had submissions from other bodies, including the British and Irish Ombudsman Association; the Insolvency Practitioners Association; The Insolvency Service; and R3, the association for business recovery professionals. Another key area the inquiry is considering is funding levels for The Insolvency Service, particularly for its investigations into companies and directors. In its submission, R3 warned: "The Insolvency Service's investigation and enforcement regime, which is designed to protect the public from unfit directors, is suffering from a lack of funding. This leaves culpable directors free to start up other companies, putting other businesses, investors, suppliers and members of the public at risk. The body urged the Select Committee to recommend that the Government introduces a new reporting process to improve disqualification efforts and to consider recommending increased funding for The Insolvency Service's disqualification work.