Phoenix Company Deals More Likely to Fail Again
Turnstone Intelligence research shows businesses revived by previous management via pre-pack administrations fail more frequently than those bought by unconnected parties.
A study by Turnstone Intelligence reveals that businesses revived through connected-party pre-pack administrations—often called phoenix deals—are significantly more likely to fail again than those acquired by unconnected buyers. Analyzing 1,738 administrations in England and Wales from 2019, the research found that 44% of connected-party deals resulted in a second insolvency by July 2026, compared to 26% for unconnected buyers.
The findings also highlight poor outcomes for unsecured creditors. In connected-party deals involving deferred payments, creditors including HM Revenue and Customs received only 1.58p in the pound. Critics argue the practice allows non-viable zombie businesses to shed liabilities, costing taxpayers hundreds of millions of pounds annually.
Industry body R3 defended the process as a legitimate and regulated insolvency tool, noting that 2021 rules increased scrutiny. R3 Chief Executive Caroline Sumner stated that administrators must achieve the best outcome for creditors overall. However, Turnstone Intelligence Managing Director Ben Sims noted that the results support industry suspicions regarding whether saving these businesses is worth the impact on taxpayers and creditors.
