Can directors buy back their business from administration?

Yes, directors can buy back their business through a process known as a pre-pack administration or open sale, provided the transaction is fair and transparent. In a pre-pack, directors often form a new company, sometimes called a ‘newco,’ which purchases the assets of the old insolvent business. This allows the business to continue trading, protecting jobs and preserving brand value. However, strict rules apply to prevent abuse. Administrators must obtain independent valuations, demonstrate that the sale achieves the best outcome for creditors, and disclose full details in a report. While creditors may view connected-party sales with suspicion, they are often accepted if they return more value than liquidation. Directors considering this option must have funding in place and be prepared for scrutiny. Buying back the business can be a viable route to survival, but it requires careful handling to balance creditor interests with directors’ desire to preserve operations.