Selling a Business in Administration: What Directors and Buyers Need to Know.
NAVIGATING SALES DURING INSOLVENCY WITH STRUCTURE AND STRATEGY
Insolvency procedures are not solely about winding down operations—they can also provide a strategic route for salvaging viable parts of a business. In 2025, with company administrations at their highest level since 2017, a growing number of business sales are taking place under the guidance of insolvency practitioners. Whether through open market sales or pre-packaged arrangements, these transactions must follow strict regulatory frameworks designed to ensure fairness, transparency, and the best possible returns for creditors.
Directors and potential buyers must understand the legal landscape and procedural expectations surrounding these sales. A structured approach is essential to achieving an outcome that aligns with regulatory standards and commercial realities.
VALUING AND MARKETING A BUSINESS IN ADMINISTRATION
When a company enters administration, the appointed IP must quickly assess whether the business can be sold—either in whole or in part. The aim is to maximise returns for creditors while maintaining operational continuity where possible.
Valuation is carried out independently and considers tangible assets (such as equipment, stock, and property), intangible assets (such as brand value, goodwill, and customer contracts), and the company’s trading potential. Once a valuation is completed, the business is marketed in a manner that is reasonable, proportionate, and commercially sound.
IPs must demonstrate that they have sought the best achievable outcome for creditors. This involves open and fair marketing through appropriate channels, unless a pre-packaged sale is being arranged.
PRE-PACK SALES VS OPEN MARKET SALES
There are two primary sale types during administration:
Pre-Packaged Sales:
A pre-pack sale is arranged before the company formally enters administration and is executed immediately upon the appointment of the administrator. These sales often allow for business continuity and job preservation but face heightened scrutiny due to their lack of public marketing.
Since April 2021, all pre-pack sales to connected parties (such as directors, shareholders, or family members) must be reviewed and either approved by creditors or independently evaluated by a qualified third party under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021. This ensures transparency and helps address creditor concerns about perceived conflicts of interest.
Open Market Sales:
In contrast, an open market sale involves advertising the business post-appointment and inviting offers from third parties. This process can take longer but is often viewed as more transparent, especially when selling to unconnected buyers.
Both options require clear evidence that the sale was conducted in good faith, in the best interests of creditors, and in compliance with insolvency regulations.
WHAT DIRECTORS NEED TO CONSIDER
If you are a director of a company facing administration and considering a sale, it is critical to act within the bounds of your duties:
Avoid any conflicts of interest when proposing to purchase company assets
Ensure all decisions are documented and made in consultation with the appointed IP
Prepare accurate financial records and disclose all relevant information during the valuation process
Be aware of regulatory oversight, especially in pre-pack cases where you may be a connected party
Failure to cooperate with the IP or attempting to undervalue assets can lead to claims for misfeasance, disqualification proceedings, or other enforcement action.
WHAT BUYERS SHOULD KNOW
For potential buyers—especially those looking to acquire distressed assets—administration sales can offer unique opportunities, but they come with legal and practical caveats:
Conduct thorough due diligence on the business, its contracts, employees (under TUPE), and any contingent liabilities
Be aware that warranties and indemnities are limited—sales are typically made on a “sold as seen” basis
Engage legal and financial advisors experienced in insolvency to mitigate transactional risks
Understand that regulatory approvals or independent valuations may be required if purchasing as a connected party
Buyers must be prepared to act quickly—administrators will prioritise offers that are deliverable and capable of being executed within tight timeframes.
REGULATORY EXPECTATIONS AND COMPLIANCE REQUIREMENTS
All sales during administration must adhere to guidance issued by the Insolvency Practitioners Association (IPA) and the Statement of Insolvency Practice 16 (SIP 16), which sets out reporting obligations for pre-pack transactions. IPs are required to provide detailed justifications for the chosen sale method, evidence of marketing efforts, and a breakdown of how creditor value was maximised.
It is also vital that all parties recognise the increasing focus from regulators and the media on distressed business sales. IPs, directors, and buyers must ensure that all decisions can withstand external scrutiny and align with the public interest in maintaining confidence in the UK insolvency framework.
A STRUCTURED SALE PROCESS PROTECTS VALUE AND REPUTATION
Selling a business in administration is a complex process governed by strict legal standards and professional expectations. For directors, early engagement with qualified advisors is essential. For buyers, understanding the framework—and acting within it—will help secure viable acquisitions while avoiding compliance pitfalls.
At Voscap, we provide experienced guidance throughout the administration process—from valuations and pre-sale planning to independent reviews and regulatory compliance. If you are considering acquiring or preparing a business for sale in administration, our team can help you navigate the complexities and act decisively.
To speak with an advisor, contact Voscap on 020 7769 6831 or email help@voscap.co.uk.
ABOUT VOSCAP
Voscap’s primary objective is to save your business. Our team of experts’ knowledge in restructuring and turnaround assignments is invaluable when assessing the best option available to your needs. With experience spanning several decades, we have the skill and resources to provide viable solutions within all industry sectors. All organisations go through difficult times and we are here to help. From small to multi-million turnover businesses, we have dealt with the most complex of cases. We offer an initial free assessment in analysing your financial position and providing clear and precise advice making your experience a simple non-complicated process.