Administration can be a route to rebirth – Daily Business Magazine

There are numerous options available when a business hits choppy waters, writes KAREN LITTLE

According to the Insolvency Service, company administrations in the UK between December and January jumped by 41% to 151, highlighting the mounting financial pressure facing businesses. However, calling in administrators does not necessarily mean they have reached the end of the road.

In recent months, several high-profile high street names have attracted significant media attention, demonstrating both the risks and the restructuring tools available through administration.

One of the most headline-grabbing examples was Revolution Bars Group, owner of the Revolution bar chain. The group entered administration and, according to media reports, closed 21 sites with the loss of 591 jobs.

However, the outcome was not a complete collapse. Through a series of pre-pack sales completed immediately on the administrators’ appointment, 41 sites were secured along with approximately 1,500 jobs.

Another prominent case is Claire’s. Last autumn the administrators adopted a trading strategy to allow time for a structured sale process. Following an extensive marketing exercise, the bulk of the business and assets were sold in September 2025.

Importantly, no immediate redundancies were made and around 1,220 employees transferred to the purchaser. Unfortunately, in January this year the business re-entered administration, putting thousands more jobs at risk.

TGI Fridays has also hit the headlines again. Its owners completed a pre-pack transaction that secured the transfer and continuation of 33 UK restaurants, safeguarding approximately 1,384 roles. Again, the use of a pre-pack mechanism enabled speed and continuity in what might otherwise have been a far more disruptive insolvency process.

When a Scottish company enters administration, control passes from the directors to a licensed insolvency practitioner. The administrator’s statutory objective is to achieve the best possible result for creditors.

In practice, this requires early strategic planning, often involving discussions with directors and secured lenders before formal appointment. While every case turns on its own facts, there are several core options available.

Rescue as a going concern

Usually, the most desirable outcome is the rescue of the company itself. This typically involves stabilising the business, continuing to trade, reducing costs and restructuring debts to return the company to viability.

Measures may include renegotiating leases, securing new investment or agreeing revised payment terms with creditors. If successful, the company exits administration intact. However, rescue is only realistic where the underlying business model remains fundamentally sound.

Sale of the business – pre-pack administration

A common route, particularly in retail and hospitality, is a going concern sale by way of a pre-pack administration. In these cases, substantial marketing and negotiation take place prior to the administrators’ appointment, with completion occurring immediately thereafter.

This approach can preserve brand value, maintain customer confidence and protect employment. Although sometimes criticised – particularly where the purchaser is connected to the existing management – pre-packs can provide certainty and speed in distressed circumstances.

Trading administration with phased asset realisation

Where a full rescue or immediate sale is not achievable, administrators may continue trading while marketing assets or divisions over time. This can maximise value compared with an immediate shutdown, especially for multi-site operations or asset-rich businesses.

Maintaining goodwill and customer relationships can enhance sale prospects. The risk, however, is that ongoing trading costs must be funded and losses during the process can reduce returns if disposals are delayed.

These options are not exhaustive, but they illustrate that administration does not automatically mean closure. For directors and creditors alike, understanding the available strategies – and seeking timely advice – is crucial to protecting value and maximising recovery in an increasingly challenging economic climate.

* Commentary – Company Insolvency Statistics January 2026 – GOV.UK

Karen Little is a senior solicitor in dispute resolution at Aberdein Considine

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