Phoenix deals where former management re-acquires failed companies often lead to repeat failures and significantly lower repayments to creditors, highlighting serious flaws in current insolvency practices.
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Exclusive: research for the Guardian shows ‘pre-pack’ deals with former management also pay far less to creditorsThe boss whose twice-bust business appears to be backInsolvent businesses reacquired by their previous management in “pre-pack” administrations are much more likely to fail again and tend to repay far less to creditors, research for the Guardian suggests.The study is the latest to raise questions about the practice of “phoenixism” – accounting’s controversial art of liquidating companies to allow directors to return with a new entity, free of debts. Continue reading...
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