Key facts
- 44% of pre-packs involving connected parties resulted in a second insolvency by July 2026.
- 26% of pre-packs with unconnected acquirers led to subsequent insolvency.
- 65% of connected-party administrations allowed former owners to reacquire assets via future installments.
- Unsecured creditors received a return in only 23% of connected-party pre-packs with deferred payments.
- When the buyer was unconnected, 36% of pre-pack administrations resulted in repayments to unsecured creditors.
Insolvent businesses reacquired by their previous management in "pre-pack" administrations are much more likely to fail again and tend to repay far less to creditors, research for The Guardian suggests. The study, which used AI agents to analyze over 1,700 administrations from 2019, found that 44% of pre-packs involving connected parties resulted in a second insolvency by July 2026, compared to 26% for unconnected acquirers. Connected parties were also more likely to defer payments and unsecured creditors received significantly less in these deals. Experts noted the findings align with previous research and raise concerns about "zombie" businesses shedding liabilities.