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Review of pre-pack administrations announced

Review of pre-pack administrations announced

The Government is asking a leading accountant to examine “pre-pack” administrations after criticism over the rescue of the collapsed Internacionale high street chain. Business Secretary Vince Cable has appointed Teresa Graham to take a close look at pre-pack arrangements over fears that creditors are not given enough information about what they stand to lose.

Internacionale, a womenswear chain, called in Ernst & Young administrators last week but it was promptly bought by a new company made up of its existing shareholders, saving more than 1,500 jobs at 114 outlets in England and Wales.

A total of 18 stores were lost and it is not clear whether the new business has taken on the people working in them. Internacionale’s accounts reveal that it was £19 million in debt, £9.4 million of which was owed to its largest investor. Creditors are to receive a letter to explain why it went into administration and the amounts they stand to lose remain unclear. The chain’s new owner has pledged to honour gift vouchers, orders with part-paid deposits and valid returns of goods.

One of the administrators, Tom Jack, said most retailers on the high street have faced tough conditions during the economic crisis, but fashion has proved to be a particularly competitive market.

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