The number of pre-packs has continued to increase dramatically since the introduction of new regulations in 2021, according to new data from the Insolvency Service.
The Annual Review of Insolvency Practitioner Regulation 2024 (pub. June 2025) shows that the number of pre-packs has risen from 201 in 2021 to 628 in 2024, an increase of 212%. Transactions in 2025 so far have included Pizza Hut UK franchisee Heart with Smart; publisher Unbound; fashion e-tailer In the Style; and office furniture group Southerns Broadstock; with the Buchler Phillips team adding two more to this number in June 2025 – the restructuring of an Engineering Group using two pre-packs; a CVL and an MVL. The data reports a similar rise in the number of connected person sales (395 in 2024 as compared to 329 in 2023, 201 in 2022 and 106 in 2021).
Appointed administrators are required to submit Statements of Insolvency Practice 16 (SIP 16) disclosure statements in administrations to explain why a pre-pack sale was in the best interest of creditors. The monitoring of this data by the Insolvency Service shows a trend consistent with other relevant government statistics: company insolvencies in the first five months of 2025 were at a similar level to 2023, which saw a 30-year high. Monthly administrations have increased from 43 in May 2021 to 136 in May 2025, following the introduction of new regulations for connected party sales, the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021.
The Regulations require either creditor consent for sales to connected parties, or that connected parties obtain an independent opinion from an ‘Evaluator‘ who provides a formal written view of reasonable grounds and consideration for the transaction. Despite early criticism that the requirements around the qualification of the evaluator were very light, the data shows that there was only one connected person sale in 2024 where creditor approval was sought rather than an Evaluator Report, possibly also reflecting the practical difficulties in obtaining creditor approval in the context of a pre-pack.
The introduction of an Evaluator appears to have been effective in increasing stakeholder confidence in pre-pack sales to connected parties and to have preserved what is generally viewed as a valuable tool for business rescue. In any event, it is incumbent on Insolvency Practitioners to consider all options, in the best interests of creditors, during the pre-administration planning period (however short) before committing to a course of action.
Allowable payments to a sanctioned person
The Buchler Phillips team is no stranger to helping businesses and individuals navigate the maze of existing or potential sanctions as a result of their ownership or international activities. We work alongside a range of leading legal advisers to achieve an optimal outcome for clients continuing to manage legitimate UK enterprises at a time when the dynamics of international relations are complex. We were therefore particularly interested in a case from earlier this summer in which the Court found that payment of rent under a pre-sanction lease fell within the exceptions to UK regulations.
In Chanana v Khan [2025] EWHC 1472 (Ch), payment of rent under a tenancy agreement that was entered into before the landlord became a sanctioned person was deemed correct. It is a useful confirmation of the courts’ approach to pre-existing liabilities and contractual obligations that arose before a counterparty becomes a designated person or entity.
The underlying dispute related to non-payment of rent under a three-year fixed-term tenancy agreement for a property in Belgravia, London. The rent was payable quarterly and was not paid by the tenant between 20 October 2022 and 20 April 2024, eventually prompting a statutory demand for more than £850,000, comprising the principal amount and contractual interest. The tenant applied to set aside the statutory demand, on the basis that, in April 2022, the landlord became a sanctioned person under the Russia (Sanctions) (UK Exit) Regulations 2019 (UK Regulations). The tenant, therefore, argued: (i) UK Regulations prevented him from paying rent to the landlord; (ii) he reasonably believed he was prevented from making the payments by s.44 of the Sanctions and Money Laundering Act 2018 (SAMLA) – the statutory demand should be set aside because s.44 meant he could not be liable for any civil proceedings regarding non-payment; (iii) his solicitors had held £678,000 on an undertaking to pay the landlord solicitors once permission to do so was granted by the Office of Financial Sanctions Implementation (OFSI), or a court order to that effect – i.e. the payment obligation was effectively secured.
Law firm Hill Dickinson points out that Regulation 58(5) provides for the following exception: “(5) The prohibitions [in regulations 12 and 13] are not contravened by the transfer of funds to a relevant institution for crediting to an account held or controlled (directly or indirectly) by a designated person, where those funds are transferred in discharge (or partial discharge) of an obligation which arose before the date on which the person became a designated person.”
The Court found that the Regulation 58(5) exception applied in this case. The payment of rent due under a lease that was made before the landlord’s designation would be for these purposes a payment in discharge of a pre-designation obligation, in circumstances where the relevant sums only fell due for payment after designation. In any event, the Court did not think the claim was adequately secured. The arrangement in question, whereby funds were held by the tenant’s solicitors, was unilateral and had not been agreed to by the landlord.
A recurring dilemma faces those who are contractually obliged to make payments to a sanctioned or potentially sanctioned counterparty. They face the possible risk of breaching their contract or breaching sanctions. It is understandable to err on the side of caution and no to make a payment without express permission from the court, a regulator or an official agency such as OFSI. However, the risk of contractual exposure remains, with potentially significant costs. Professional advice is critical.
Care home cost hikes force shakeout
Taken at face value, the long term outlook for the care home sector is encouraging: the UK market is expected to grow at a CAGR of 11% from 2025 to 2030. Globally, similar forecasts are based on an ageing population combined with increasing income levels and faster growth in specific conditions requiring care, notably dementia.
In the UK, a relatively high 80% of care homes are privately operated, some in large chains typically owned by private equity, while a large proportion remains fragmented among small, independent outfits. For all of these homes, the short-to-medium term outlook is deceptive; growth is driven by higher fees, which have in turn been driven by higher costs: compliance for tighter regulation and monitoring; energy costs and food price inflation; hikes in staff costs supported by the National Living Wage and higher employer’s National Insurance; and a fall in immigration from countries previously plugging a large gap for care workers have all conspired to slash profitability.
Operators running a very small number of homes – maybe even just one – are particularly exposed. They don’t have access to a large corporate balance sheet, nor to further funds secured on their property. It’s no surprise that care home insolvencies are expected to rise dramatically this year. Law firm Nelsons has studied the sector and cites research showing that a staggering 22% of care providers are contemplating outright closure, 77% are being forced to deplete their reserves, and 64% anticipate staff redundancies.
As ever, the insolvency toolkit offers options for care home operators seeking to grip their problems and steady their businesses. A Company Voluntary Arrangement (CVA) may buy some breathing space while management considers large, specific issues such as landlord negotiations when the main trading property is leased. If liquidation and closure is the answer, then a CVL may be pursued by the directors, although professional help is crucial in managing the process: winding down a care home business is hugely complex, given the number of stakeholders involved – not least the residents, many of whom may be in very poor health.
There are presently 1.6 million people in the UK aged 85 or older. The figure is expected to almost double by 2045. Care homes are clearly becoming an increasingly important sector but the scale of fallout in tough times will grow accordingly while the financial profiles of such businesses remain in their present form.
Personal insolvency rules set for review
Are the debt remedies that are presently available still working for people in crisis or for creditors? Debt charities think not and have produced a paper calling for a fundamental overhaul of the personal insolvency system.
Joint research from Citizens Advice and the Money Advice Trust, the charity that runs National Debtline, has set out a blueprint for a fairer, streamlined and more consistent system. It comes as the Insolvency Service is set to explore options for significant structural reform as part of its ongoing review the entire insolvency landscape. The new report contains a practical template for a better, more effective system which offers people a positive route out of debt, calling for a single point of entry into personal insolvency, accessed via a regulated debt advice provider. The report also calls for repayment and write-off pathways depending on individual circumstances, flexibility to accommodate changes in individual circumstances while insolvent and to support financial resilience by helping people rebuild stability and reducing the risk of future problem debt.
Data shows a worrying trend of ‘negative budgets’ among debt advice clients, where households have less income than they need to cover their essential living costs. In 2024, 50% of Citizens Advice debt clients and 43% of National Debtline clients had a negative budget. This development is linked to the growth in household bill arrears, notably – energy and council tax.
A key call to action is fixing the complexity, strict eligibility criteria and inflexibility of the system that currently leave people trapped in unmanageable debt. The charities also highlight their continued concerns about the Individual Voluntary Arrangement (IVA) market, following recent research by the Insolvency Service which found evidence of poor practice in 60% of IVA cases.
The overarching message is that an effective personal insolvency system is crucial in reducing the harm caused by problem debt, supporting returns to creditors where possible and giving people trapped in debt the opportunity of a fresh start towards longer-term financial resilience. Individuals’ debt problems are deeper and more complex than ever before, but insolvency solutions are not seen to have changed with the times.
The Insolvency Service is presently taking soundings from stakeholders including Insolvency Practitioners, creditors and others involved in managing personal debt.
As ever, the Buchler Phillips approach to business challenges is ‘workout, not bail out’. Don’t hesitate to get in touch for an exploratory chat if your business needs help. Addressing the cracks now will, in many cases, avoid the need to start again.
Our helplines below are open for free initial consultations.
Jo Milner 07990 816904
David Buchler 07836 777748
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About Buchler Phillips
Buchler Phillips is an independent, UK based corporate recovery and restructuring firm, with an impeccable Mayfair heritage dating back to the 1930s.
Led by David Buchler, former Europe and Africa chairman of global consultancy Kroll Inc, our senior team is equally comfortable advising large corporations, Small & Medium Enterprises (SMEs) or individuals. In addition to decades of experience, each of our Partners brings to any given assignment unique independent insight, free from conflicts of interest, that is often sought but rarely found by clients or co-advisors.
The firm is sector-agnostic, but has particularly strong credentials in property; financial services; professional services; leisure and hospitality; retail and consumer; UK sports; media and entertainment; transport and logistics; manufacturing and engineering; technology and telecoms.
Our activities fall broadly, though by no means exclusively, into financial restructuring, including fraud and forensic investigations; operational restructuring and turnaround; expert witness services and recovery solutions for corporates and individuals.
This newsletter is published for the purposes of general information only and does not constitute advice. Any action taken by readers upon the information above is entirely at their own risk.