Study examines outcomes of connected-party pre-pack insolvencies
Business · First reported 26 Oct, 00:32 · Updated 00:42
Research commissioned by the Guardian compares repeat insolvencies and creditor repayments in pre-pack sales to connected and unconnected buyers. It reports worse outcomes for connected-party deals, while an insolvency industry body says the research predates rules that added safeguards.
- The study found that 44% of pre-packs involving connected buyers had led to another insolvency by July 2026, compared with 26% involving unconnected buyers.
- In connected-party deals with deferred payments, unsecured creditors received repayments in 23% of cases, averaging 1.58 pence per pound; the corresponding figures for unconnected buyers were 36% and 7.86 pence.
- R3 said the research covered cases before 2021 rules introduced additional scrutiny and safeguards for connected-party pre-pack sales.
Summary written by Lux AI from 2 articles
Key facts
- Administrations studied
- More than 1,700 administrations commenced in England and Wales in 2019.
- Pre-pack sales identified
- 544 among 1,738 administrations.
- Repeat insolvency
- By July 2026: 44% for connected-party buyers and 26% for unconnected buyers.
- Connected-party deferred payments
- 198 of 303 administrations, or 65%.
- Creditor repayments in deferred-payment deals
- Connected buyers: 23% of cases and 1.58 pence per pound; unconnected buyers: 36% and 7.86 pence per pound.
- Later rules
- R3 said 2021 rules added scrutiny and safeguards, including independent evaluators for connected-party sales.
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