By Maximilian Clarke

UK law on pre-pack administrations is considered a soft touch by European companies, who are increasingly taking advantage of this to register their businesses bankrupt in the UK.

Carole Hughes, managing director of credit management and debt collection agency Daniels Silverman is highlighting the issue, encouraging business owners to sigh an online petition calling for existing laws to be strengthened.

“We note recent press reports on the increase in failing companies transferring from European countries to Britain and then using British bankruptcy laws to go bust," says Hughes. "It is clear that the UK law is considered a soft touch in other European countries and companies are jumping on the band wagon to take advantage of this."

The technique of ‘bankruptcy tourism’ allows European companies to use the UK's more lenient insolvency laws to get rid of their creditors and then re-launch the company without any debt.

"While the Insolvency Service is technically able to do something about it, usually the damage has already been done and the company has been able to take advantage of Britain’s easy going bankruptcy rules," continued Hughes.

"We believe that the loophole whereby companies are using pre-packs to avoid their creditors and set up again should be closed."

Daniels Silverman's online petition can be signed here

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