Association hopes to change industry attitudes, effect changes to law.
The British Jewellers’ Association (BJA) has launched a campaign encouraging the UK jewellery industry to lobby against pre-pack administrations as an "easy route out" for businesses that find themselves in trouble.
The term "pre-pack" denotes the process through which a company is put into administration and its business and assets, or sometimes both, are immediately sold under a sale which was arranged before the administrator was appointed.
While pre-packs are not new a new form of business restructuring, their use is thought to be increasing in the UK.
The BJA has launched the campaign following the news that British jewellery company Alfred Terry has gone into voluntary liquidation owing to long-term liabilities. It was originally suggested that the company was going through a pre-pack administration, though Alfred Terry chief executive Steve Wright has since clarified that the business has been put into voluntary liquidation, meaning Alfred Terry Limited’s assets will be liquidated to pay off its creditors.
BJA chief executive Simon Rainer said that until the law surrounding business administrations is changed, stories such as the closure of Alfred Terry Limited will continue to dominate the trade press.
Rainer has contacted three MPs as well as business secretary Vince Cable to lobby for change to the Enterprise Act 2002, requesting that pre-packaged administration are far more diligently regulated.
Rainer told Professional Jeweller: "There has to be a change in the law and I would encourage all your readers to write to their local MP in an attempt to effect reform."
According to Rainer, it is often staff members or others associated with the company that suffer despite being, in the main, remote from the business’ key decision making.
"I honestly believe that pre-pack companies in the jewellery industry will be given no further latitude," Rainer added."It will simply be the case of pay us what you owe and then perhaps we may talk about future trading arrangements."
Rainer stated that it is time the jewellery industry made a stand about pre-pack administration, and that the BJA will lead the charge in changing the industry’s acceptance that it is OK to take "the easy route out".
It also hopes the campaign will effect change to The Enterprise Act 2002, which details the process for company bankruptcies and failures, which, in the opinion of the BJA, needs revisiting to ensure that far tighter regulations apply.
Having approached its local MPs and the Department of Business, Innovation and Skills, the BJA says meetings with government representatives will be held in the very near future.