If you run a hospitality business or supply one, the recent events at TGI Fridays highlight just how quickly insolvency can strike—even after a rescue. Chris Worden explains what pre-pack administration really means, who wins, who loses, and what directors, suppliers, and landlords need to know.
- Pre-pack administration lets a business sell assets quickly to a new company.
- Old debts are often left behind, affecting creditors and suppliers.
- Staff, landlords, and suppliers face uncertainty and possible losses.
- Directors must act early to avoid personal risk.
- HMRC and creditor pressure is rising in the UK.
What Happened at TGI Fridays?
TGI Fridays was bought out of administration in October 2024 for over £9 million. Just a year later, the new owners filed a notice of intention to appoint administrators again. By January 2026, another pre-pack administration was being prepared, showing how quickly fortunes can change.
What Is Pre-pack Administration?
Pre-pack administration is when a company arranges to sell its assets to a new buyer—often the same management—immediately after entering administration. The old company’s debts are left behind, and the new company continues trading, usually with fewer sites and staff.
Chris Worden uses the analogy of a lorry carrying valuable cargo: when the lorry breaks down, the cargo is quickly moved to a new lorry, leaving the wreck behind. In business terms, this means saving what can be saved, fast.
Who Wins and Who Loses?
Staff
Some staff may transfer to the new company, but redundancies are common. Employees with over two years’ service can claim statutory redundancy pay, unpaid wages, holiday pay, and notice pay from the Redundancy Payments Office.
Suppliers
Suppliers to the old company often become unsecured creditors and may not get paid. New terms are usually required to continue trading with the new company, often on a cash-on-delivery basis.
Landlords
Landlords may be left with arrears and empty units. If you want to stay in the same site after a pre-pack, it’s vital to get the landlord’s support and ensure rent is up to date.
Directors
Directors lose control once administrators are appointed. The process is scrutinised, and improper asset transfers or preference payments can cause personal problems. Chris Worden warns against turning business debt into personal debt by taking out personally guaranteed loans to keep the business afloat.
Key Takeaways
- Pre-pack administration can save parts of a business but leaves many creditors unpaid.
- Staff, suppliers, and landlords face risks and uncertainty.
- Directors should avoid risky personal guarantees and seek advice early.
- HMRC is now more aggressive in chasing debts.
- Early action gives directors more options and less personal risk.
Frequently Asked Questions
- What is pre-pack administration?
- It’s a process where a company arranges to sell its assets to a new buyer immediately after entering administration, often leaving old debts behind.
- Who benefits from a pre-pack administration?
- The new company and some staff may benefit, but unsecured creditors and suppliers often lose out.
- Can staff claim redundancy pay in a pre-pack?
- Yes, staff with over two years’ service can claim statutory redundancy pay and other entitlements.
- What happens to suppliers in a pre-pack?
- Suppliers to the old company usually become unsecured creditors and may not get paid for previous invoices.
- What should directors do if facing insolvency?
- Seek professional advice early to understand your options and avoid personal risk.
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