A company you deal with, compete with, or simply know of has gone into administration, and its stock, plant, premises or brand are now up for sale. Buying out of an administration is not the same as buying a healthy business: what transfers to you, what doesn't, and how fast you need to decide are all different from an ordinary acquisition.
If you're on the other side of this, owed money by the company rather than looking to buy from it, see the guide on what happens to your unpaid invoice.
An administrator's job, under Schedule B1 of the Insolvency Act 1986, is to rescue the company where possible or, failing that, get a better result for creditors than an immediate winding-up would. Part of that job is a wide statutory power to sell the company's property. That's what you're buying: assets sold by the administrator acting for the company's creditors, not a business sold by its former owner.
The charge structure over those assets matters. Anything covered only by a floating charge can generally be sold in the ordinary course of the administration. Anything covered by a fixed charge, typically freehold property and sometimes specific plant, needs either the chargeholder's consent or a court order under paragraph 71 of Schedule B1 before the administrator can sell it free of that charge, with the proceeds going to the chargeholder up to the value of their security. Ask early which of your target assets fall into which category, and who else needs to sign off before the deal can complete.
It's a common assumption that any insolvency wipes the slate clean on employees. It doesn't, and getting this wrong is the single most expensive mistake a first-time buyer makes. TUPE's automatic-transfer exemption only applies to insolvency proceedings instituted with a view to liquidating the company's assets, meaning compulsory liquidation or a creditors' voluntary liquidation. Administration is not that: its stated purpose is rescue or a better outcome than liquidation, not liquidation itself. Case law (Key2Law (Surrey) LLP v De'Antiquis, Oakland v Wellswood (Yorkshire) Ltd) has confirmed that employment normally transfers to the buyer in an administration sale, with continuity of service intact.
There is a partial easing: under regulation 8 of TUPE, certain sums owed to employees, up to statutory limits, can be recovered from the National Insurance Fund rather than landing on you as the buyer. But the jobs themselves, and most of the terms that go with them, usually come with the deal. Factor the wage bill and any information-and-consultation obligations into your offer from the start, and get employment law advice before you sign, not after.
If a supplier sold goods to the company on terms that included a retention of title clause, and the goods are still identifiable, unused and on the premises, those goods may still legally belong to the supplier, not the company in administration. That means they were never the administrator's to include in your asset purchase, whatever the inventory list says.
Ask the administrator directly which stock has been claimed or is under review by a third party under retention of title, and get that confirmed in writing before you rely on the inventory. See the fuller explainer on how retention of title clauses actually work if you want to understand a supplier's side of this the next time it's your stock at risk.
A pre-pack is a sale negotiated and agreed before the administrator is even formally appointed, then completed as one of the administrator's first acts, sometimes within hours of the appointment. It exists because trading value and staff goodwill erode by the day once a company's troubles become public, so speed itself protects the value being sold.
Pre-pack sales are governed by SIP 16 (Statement of Insolvency Practice 16), which requires the administrator to publish a disclosure statement to creditors explaining why the pre-pack route was chosen. If the buyer is connected to the failed company, such as a director buying the business back through a new vehicle, an independent opinion from the Pre Pack Pool is available and its absence has to be explained in the disclosure statement. As an outside buyer with no prior connection to the company, none of that scrutiny falls on you, but the underlying speed does: have financing and your due diligence questions ready before you make first contact, because the window to act is measured in days, sometimes hours, not weeks.
Administrators typically won't share the asset list, financials, or staff numbers until you've signed a non-disclosure agreement. Expect this as the first step, not a delay tactic.
Inventory lists compiled under time pressure are not always accurate. Walk the site, or send someone who can, before you rely on the paperwork.
Ask the administrator directly, and get the answer in writing. See the section above.
You need to know whether the chargeholder has already consented to the sale or whether a court order is still needed, and who's responsible for getting it before completion.
If there's a lease, you're usually looking at either an assignment of the existing lease or a new lease from the landlord, and either route generally needs the landlord's consent. Landlords can refuse, or use the moment to renegotiate terms.
Customer and supplier contracts typically need novation, meaning all parties agree, rather than a simple assignment. Software licences, regulatory permits, and industry-specific accreditations often don't transfer automatically and may need a fresh application in your own name.
Financing arranged after you've found the right deal is usually financing arranged too late. Line it up before you start looking seriously.
Given that the transfer usually can't be avoided, understanding the wage bill, terms, and consultation obligations you're taking on should shape your offer, not follow it.
If there's a competitor, supplier, or a business you'd want first refusal on, add it to your watchlist. Confirmed is free: add up to five companies, and you get an email the day one enters administration. Protect adds liquidation, strike-off, and the earlier warning signs, across an unlimited number of companies, so you're often not finding out from the same place everyone else does.
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