The content on this page has been written by Keith Steven and approved by Chris Ferguson Licensed Insolvency Practitioner and Director of RMT Recovery and Insolvency. In 2026, with the launch of the Insolvency Service’s Abusive Phoenixism Taskforce, restarting any business in a new company must be done with care.
A Phoenix company is a new entity formed to purchase the business and assets of an insolvent company, often by the original directors. While the term refers to a business rising from the ashes, the process is governed by strict regulations to ensure creditors are not unfairly disadvantaged.
The process is entirely legal, provided that assets are sold at a fair market value and the directors’ actions are transparent. In 2026, the primary focus of authorities is ensuring that the restart is a bona fide rescue rather than a deliberate attempt to defraud creditors or avoid tax obligations.
Both pre-pack administration and liquidation restarts (phoenix companies) are viable insolvency proceedings that allow a business to continue in a new guise. While they share similarities—such as the investigation of director conduct and the transfer of employee contracts under TUPE—their mechanisms differ significantly.
A pre-pack administration involves organising the sale of assets before an administrator is formally appointed. Guided by an Insolvency Practitioner (IP), the business is sold in one fluid motion to a third party or a newco formed by the directors. This process is designed to stop legal action and debt recovery immediately, allowing for minimal disruption to trading and staff.
By contrast, a liquidation restart typically follows a two-stage approach. First, a newco is established and begins trading to gather enough working capital. Second, the original company enters liquidation, and its assets—such as stock and intellectual property—are realised and purchased by the newco at a fair price. While pre-pack administration focuses on rescuing the business via administration rules, a phoenix restart realises assets as part of a formal winding-up process.
To successfully phoenix a business in 2026 without facing personal liability or criminal charges, directors must adhere to several critical rules:
The law prohibits directors from using a name similar to the liquidated company for five years. We help you navigate the three legal exceptions, including the formal Notice to Creditors via the London Gazette, to ensure you comply with the Insolvency Act 1986 and avoid personal liability for the new company’s debts.
To protect unsecured creditors, assets must not be sold at an undervalue. We coordinate with RICS-qualified Chartered Surveyors to provide independent valuations. This provides the necessary evidence to satisfy HMRC and the liquidator that the sale was conducted fairly and at market rate.
The 2026 enforcement environment is stricter than ever. With HMRC now frequently demanding upfront VAT security deposits from phoenix companies, we provide a full risk assessment of your trading history to ensure your restart is positioned as a legitimate recovery.
Whether you choose a pre-pack or a liquidation restart, the transition must be overseen by a Licensed Insolvency Practitioner. Failing to document the marketing of assets, ignoring TUPE regulations, or mismanaging the reuse of a company name can lead to director disqualification of up to 15 years.
We provide practical advice to help you determine whether a Phoenix restart or a Pre-Pack Administration is the safest and most efficient path for your business. Call our team free of charge on 0800 9700539 for a same-day consultation.
Written ByKeith Steven
Turnaround Director
Keith is the Turnaround Director of RMT Accountants & Business Advisors. Prior to being acquired by RMT his company KSA Group has undertaken more than 300 CVA led rescues. Read our case studies to see how.
