Study: 44% of 2019 UK pre-pack deals bought back by insiders failed again by July 2026

A company goes bust. Its owners buy the assets back through a quiet, pre-arranged deal. The debts stay behind. A new study says the businesses that come out of that process are far more likely to collapse a second time.

The research was commissioned by the Guardian from Turnstone Intelligence. The firm used AI agents to read official documents on more than 1,700 UK administrations from 2019, then checked which of those businesses had gone insolvent again by July 2026.

The failure gap

In a "pre-pack" administration, the sale of a failing company's assets is agreed before formal insolvency proceedings begin. When the buyer was a "connected party," such as a former director or shareholder, 44% of the businesses suffered a second insolvency by July 2026.

When the buyer had no connection to the failed company, the figure was 26%.

That is an 18-point gap, seven years on.

"I was surprised how big the gap remains," said Ben Sims, managing director of Turnstone Intelligence. "These results support what many in the industry have long suspected and will feed the continuing debate as to whether saving these businesses is worth the impact on taxpayers and creditors."

Paying later, paying less

The data also showed that insiders were far more likely to get time to pay. In 198 of 303 connected-party administrations, or 65%, former owners and directors reacquired the assets through future instalments. Among unconnected buyers, 28% used deferred payments.

The returns to creditors were thin. Unsecured creditors, who typically include HM Revenue and Customs, received something in only 23% of pre-packs where a connected party deferred payment. Those deals paid 1.58p in the pound.

When the buyer was unconnected, 36% of pre-pack administrations produced a repayment to unsecured creditors, at 7.86p in the pound. That is roughly five times the recovery rate, though still a small fraction of what was owed.

"You would hope these deals would provide better outcomes to creditors, but we see them getting almost nothing," Sims said. "Of course, the biggest loser is often the taxpayer."

The taxpayer bill

HMRC estimates that phoenixism costs taxpayers hundreds of millions of pounds a year. The term describes liquidating a company so its directors can return with a new entity free of the old debts.

The Guardian's account says cases have included owners extracting millions of pounds in dividends and loans from businesses they later arranged to buy back from administrators. Those are examples of individual cases. The study does not put a figure on how common that conduct is.

The new numbers appear to closely track two earlier reports in the field, including research by the University of Wolverhampton for the government in 2014, known as the Graham review.

What the numbers do and do not show

The study measures outcomes. It does not establish that insider buy-backs themselves cause the later failures, or that any individual buyer acted improperly. A business that fails twice may have been weak for reasons that have nothing to do with who owned it. Buying a company back is legal, and insiders sometimes know best whether a business is salvageable.

The findings are from a single commissioned study. Turnstone's own framing is that the results will "feed the continuing debate" over whether preserving these businesses justifies the cost to creditors and the Treasury.

That cost lands on the people with the least say in the deal. Unsecured creditors typically cannot veto a pre-pack that has already been agreed, and a state tax authority sits among them. Every pound HMRC does not recover is a pound other taxpayers make up.

For policymakers, the obvious issue is whether deferred-payment terms for connected buyers should face tougher scrutiny. The deferral gap is the sharpest number in the data: 65% of insider buyers got instalments, against 28% of outsiders. No government response to the study has been announced.