Insolvent businesses bought back by their own former management through so-called pre-pack administrations are far more likely to collapse a second time, and usually return much less to creditors, according to research commissioned by The Guardian.
The analysis, carried out by Turnstone Intelligence, used AI tools to examine official filings for more than 1,700 administrations from 2019. Where a firm's assets went to connected parties such as former directors or shareholders, 44% had gone through a second insolvency by July 2026. The figure was 26% when the buyer had no link to the failed company.
Pre-packs, in which a rescue sale is arranged before formal insolvency begins, are legal but controversial because unsecured creditors often lose out. HM Revenue and Customs estimates that the practice, sometimes called phoenixism, costs taxpayers hundreds of millions of pounds a year.
Source: The Guardian
