{
  "id": 16453113,
  "title": "Bust companies revived in ‘phoenix’ deals more likely to fail again, study finds",
  "url": "https://urgent.news/2026/10/25/bust-companies-revived-in-phoenix-deals-more-likely-to-fail-again",
  "topic": "science",
  "section": "Science",
  "published": "2026-10-25T09:00:57.000Z",
  "source": {
    "name": "Guardian Business",
    "slug": "guardian-business",
    "url": "https://www.theguardian.com/business/2026/oct/25/bust-companies-revived-in-phoenix-deals-more-likely-to-fail-again-study-finds"
  },
  "original_language": "en",
  "account": "A study commissioned by the Guardian suggests that businesses revived through \"pre-pack\" deals involving former management are more likely to fail again and repay creditors much less. These \"phoenixism\" deals, which involve liquidating a company to allow directors to return with a new entity, often leave unsecured creditors with significant losses. The research, conducted by Turnstone Intelligence using AI agents to analyze over 1,700 administrations in 2019, found that 44% of pre-packs resulted in a second insolvency when assets were bought by connected parties like former directors and shareholders. Only 26% of pre-packs produced a subsequent insolvency when assets were acquired by unconnected parties. Connected parties were also more likely to defer payments to creditors, with 65% of those administrations allowing deferred payments, compared to 28% for unconnected parties. Unsecured creditors received only 1.58p in the pound in deals involving connected parties, compared to 7.86p when the buyer was unconnected. The study's findings align with previous reports, including a 2014 Graham review and a 2018 EU study, which also highlighted poorer outcomes for creditors in connected pre-pack administrations. Insolvency industry body R3 defended the practice, stating that it is legal and regulated, but acknowledged that concerns about phoenixism mainly relate to businesses seeking to avoid liabilities while continuing to trade.",
  "summary": "Exclusive: research for the Guardian shows ‘pre-pack’ deals with former management also pay far less to creditors The boss whose twice-bust business appears to be back 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 is the latest to…",
  "key_points": [
    "Pre-pack deals with former management more likely to fail again",
    "Connected parties in pre-packs defer payments to creditors 65%",
    "Unsecured creditors recover only 1.58p in the pound in connected pre-packs"
  ],
  "editors_take": "Allowing former directors to acquire assets through pre-pack deals creates a cycle of insolvency that disproportionately penalizes unsecured creditors and reduces their chances of recovering significant funds.",
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}