Buying a business in administration — 40 answered questions

An asset (or occasionally share) purchase from a UK Insolvency Practitioner appointed under Sch B1 IA 1986 as administrator of the target company. You buy specified assets and typically none of the historic liabilities except those TUPE'd. Consideration goes to the administrator for distribution to creditors under the statutory waterfall.

Usually the company's directors, a qualifying floating charge holder (QFCH), or the court. Appointment is filed at Companies House (CH07) and published in The Gazette Part 3 within 7 days. Sell Ltd tracks both feeds in real time.

Administration aims to rescue the company as a going concern or achieve a better result than immediate liquidation (Sch B1 para 3). Liquidation (CVL or compulsory) is a wind-up — the business stops trading and assets are sold piecemeal. Buyers prefer administration because a going concern retains customer contracts, staff, IP and brand.

An asset sale negotiated before the administrator is formally appointed and signed shortly after. Regulated by SIP 16 with mandatory creditor disclosure and Pre-Pack Pool oversight for connected-party deals. Sell Ltd's guide on pre-pack for buyers has the full mechanics.

Pre-pack: 3–5 days. Marketed sale: 2–6 weeks. Trading administration marketing: 4–12 weeks. See the case studies for real timelines.

Yes. The administrator's lawyers act for the estate, not you. Budget £5k–£25k for legal DD + SPA on deals up to £2m; £25k–£75k for £2m–£10m; more above. Fixed-fee is negotiable on smaller deals.

Data-room review: 3–7 days. Physical asset walk: 1–2 days. Financial forensics: 3–5 days. Legal DD on contracts, IP and TUPE: 5–10 days. Overlap heavily — the whole DD compresses into 5–15 calendar days on a marketed sale, 2–3 on a pre-pack.

Normalised EBITDA (add back one-offs, above-market director pay), receivable collectibility (assume 30–50% haircut in distress), inventory realisability (20–40% haircut retail, 60–80% raw materials), and the true payables position including HMRC and pension arrears.

Change-of-control clauses in customer contracts, IP ownership chain, TUPE reg 15 consultation compliance by the seller, lease-assignment restrictions, retention of title on stock, and secured-creditor consents.

Companies House filings show registered charges. IPO search shows registered trademarks and patents by owner. For copyright and code, check every contributor's employment/consultancy contract for IP assignment clauses. Domains: Nominet WHOIS for .uk; registrars for .com.

Rarely in distress. Administrators typically sell on a locked-box basis at a fixed date — completion accounts are unusual. If you want one, price it into your offer as a fixed-percentage retention (5–10%) with a 60-day release.

In business-transfer administrations, yes. TUPE 2006 reg 3 defines the trigger: a transfer of an undertaking or economic entity retaining its identity. An asset-only sale (plant, no business continuity) can fall outside TUPE — but tribunal case law has narrowed this exception significantly.

In insolvency (Sch B1 administration, CVL), reg 8(6) leaves certain 'relevant employee liabilities' with the state's Redundancy Payments Service up to statutory caps (£719/wk in 2026): 8 wks arrears wages, 6 wks holiday, statutory notice and basic redundancy. Above-cap amounts stay unsecured. Use the TUPE estimator to model.

No — automatically unfair under reg 7 and the dismissal transfers to you (Litster [1990]). Post-transfer redundancies need an ETO reason (Spaceright [2011]).

Failure to inform and consult employee reps carries up to 13 wks pay per employee. Liability transfers jointly and severally to the buyer under reg 15(9). Model worst-case (13 × avg wage × headcount) into your offer or negotiate a specific indemnity.

Reg 10 transfers non-old-age occupational pension rights and arrears of DC contributions. Past-service DB liability does NOT transfer. Pensions Act 2004 s.257–258 requires the buyer to offer a matched-contribution DC scheme going forward.

Yes unless the sale qualifies as a Transfer of a Going Concern (TOGC) under VATA 1994 s.49. Meet the conditions and VAT is not charged. Fail and 20% VAT is due on plant, stock and goodwill — recoverable if you're VAT-registered but a cashflow drag.

Assets used as a business, transferee is (or immediately becomes) VAT-registered, transferee uses assets to carry on the same kind of business, no significant break in trading, and (for property with option to tax) transferee opts to tax before completion.

0.5% Stamp Duty Reserve Tax (SDRT) on the consideration for UK shares (FA 1986). No SDRT on distressed shares specifically — the general regime applies. Asset sales attract SDLT on land only, not on plant, stock or IP.

Standard non-residential SDLT rates apply to commercial property. As of 2026: 0% to £150k, 2% £150k–£250k, 5% above £250k. Lease acquisitions attract SDLT on the NPV of rent.

Trading losses do NOT transfer to a buyer under an asset sale. Under a share sale, CTA 2010 s.673 restricts loss carry-forward where there's a major change in nature/conduct of trade within 5 years of the change of ownership. Assume losses lost.

The administrator's fees paid by the OLD company reduce the pot available to creditors — they do not become the buyer's cost or deductible expense. Your own legal, advisor and DD costs are capitalised as part of consideration for CGT/CT purposes.

High-street senior term debt in 21 days: almost never. ABL (asset-based lending) is the go-to — revolvers against receivables, plant and stock close in 10–21 days. Mezzanine and family-office equity fill the gap. Sell Ltd's financing guide details every lender type.

60–70% LTV on eligible receivables (aged <90 days, non-concentrated), 40–60% LTV on plant OMV, 30–50% LTV on stock. Priced at SONIA + 3–5% depending on risk. Weekly borrowing base reports required.

A sub-set of ABL against receivables only. Cheaper than full ABL (SONIA + 2–3%) but doesn't cover plant/stock. Suits service businesses with clean debtor books. Not enough for most manufacturing acquisitions.

Only with fully underwritten funding — no 'subject to credit approval'. Provide a signed term sheet at first offer. Administrators consistently accept a lower priced fully-committed bid over a higher subject-to-funding offer.

No. Trades under administration/insolvency don't qualify for SEIS or EIS reliefs. If you incorporate a NewCo and buy the trade + assets, the NewCo can potentially qualify going forward if it meets the SEIS/EIS trading conditions — get advance clearance from HMRC.

Title only — that they have power to sell and assets are unencumbered beyond disclosure. Nothing on condition, revenue, IP validity, or contract enforceability. Sch B1 para 3 IA 1986 fiduciary duty to creditors makes warranties functionally impossible.

Synthetic W&I only — the insurer signs the warranty schedule. Premiums 3–6% of limit vs 0.8–1.5% solvent. Underwriters: Liberty GTS, Aon M&A, Marsh JLT. See the warranties & indemnities guide.

Rare. Administrators need cash to distribute. Where retained, escrow is targeted at a specific known risk (e.g. reg 15 exposure) at 3–10% of consideration, 60–180 day release.

1) Pay AWS/hosting/utilities arrears to keep systems live. 2) Message customers with the continuity story. 3) Contact key suppliers and reopen credit. 4) Deliver a floor-walk to every staff group. 5) Change signing authorities at the bank. See the 100-day plan.

Weeks 1–2: continuity. Weeks 3–4: customer reassurance + supplier reset. Weeks 5–8: cost review + ETO redundancy consultation if needed. Weeks 9–12: brand refresh, pricing model refresh, new commercial hires. Weeks 13–14: 100-day board review.

Change-of-control clauses trigger on administration/asset sale in ~50% of B2B contracts. Most customers accept continuity when contacted proactively. Sell Ltd data: 8–15% attrition in year 1 is typical; 25%+ is a red flag.

Only if the old brand is net-negative (Trustpilot <2.5 stars, sustained negative press). Rebrand cost £30k–£250k for SME retail; £150k–£500k for multi-site chains. The restaurant case study covers rebrand economics.

The buyer entity's acquisition doesn't appear in Companies House — asset sales aren't recorded centrally. The seller's administration and eventual dissolution ARE filed. Your NewCo's acquisition might appear in charge registrations if you granted security to your ABL lender.

Recourse against the administrator is limited (Sch B1 para 99 personal exclusion). Warranties are minimal. Practical remedies: (a) synthetic W&I claim, (b) escrow release, (c) supplier renegotiation, (d) rapid cost cut. Assume no recovery from the old company.