Bust companies revived in ‘phoenix’ deals more likely to fail again, study finds
News Source
•Sun, 25 Oct 2026 09:00:57 GMT
📰 What Happened
Companies rescued in pre-pack deals often fail again, a new study finds. In these deals, a struggling firm is sold before insolvency proceedings formally start. Research for the Guardian found that 44 percent of such deals from 2019 had failed again by July 2026. Deals that handed the business back to its old managers did worst. They also paid creditors far less.
🔍 The Backstory
The practice is nicknamed phoenixism: a company burns down and a new one rises from the ashes, free of old debts. Creditors and tax authorities are often left short. HM Revenue and Customs estimates the practice costs taxpayers hundreds of millions of pounds a year. Some cases involve owners taking large dividends and loans, then buying the business back cheaply. The study used AI to read over 1,700 case files.
🎯 Why It Matters
When a failed company dodges its debts, suppliers and staff lose money. Stronger checks would make the system fairer for ordinary businesses.
Companies rescued in pre-pack deals often fail again, a new study finds. In these deals, a struggling firm is sold before insolvency proceedings formally start. Research for the Guardian found that 44 percent of such deals from 2019 had failed again by July 2026. Deals that handed the business back to its old managers did worst. They also paid creditors far less.
The practice is nicknamed phoenixism: a company burns down and a new one rises from the ashes, free of old debts. Creditors and tax authorities are often left short. HM Revenue and Customs estimates the practice costs taxpayers hundreds of millions of pounds a year. Some cases involve owners taking large dividends and loans, then buying the business back cheaply. The study used AI to read over 1,700 case files.
When a failed company dodges its debts, suppliers and staff lose money. Stronger checks would make the system fairer for ordinary businesses.