Insolvency Service leaves phoenix recoveries unmeasured

The Insolvency Service’s strategy, published under chief executive Duncan Beach on 29 September 2026, commits the agency to a phoenixism taskforce of 50 people by 2028. It does not commit that taskforce to stop any specified number of connected sales, recover any specified sum or produce any minimum return for unsecured creditors. Headcount is the only enforceable target attached to the proposal.

The full strategy says the agency expects to track the value and volume of assets returned, the speed of misconduct investigations, the economic benefit of enforcement and the value of criminal assets recovered. It supplies no baseline, numerical target, reporting date or method for any of those measures. It also does not say whether an asset is counted when recovered by the state, paid into an insolvent estate or distributed to creditors.

One omission in the strategy can be partly filled from an earlier document. The Insolvency Service’s Annual Report and Accounts 2025-2026 says the 2025 Autumn Budget allocated £25 million over five years for 50 additional posts addressing director misconduct, including abusive phoenixism. The later strategy instead describes a taskforce growing to 50 people by 2028. The documents do not reconcile whether the commitment is for 50 additional posts or a taskforce with 50 people in total.

The annual report also provides the baseline absent from the strategy. During 2025-2026 the agency completed 148 civil investigations into companies where it identified abusive phoenixism and had civil or criminal investigations into another 64 companies at 31 March 2026, according to the report. Those investigations resulted in 18 companies being shut down, 87 directors being disqualified and five directors being convicted, the same report says. It gives no phoenix-specific figure for assets recovered or money distributed to creditors.

The omission is not caused by an inability to publish monetary enforcement data. The investigation and enforcement strategy published on 16 July 2025 reported that the agency obtained 1,036 director disqualifications and 121 compensation orders and undertakings worth more than £3.7 million during 2024-2025. It also put the estimated economic benefit of disqualification work above £36 million. Those were agency-wide measures rather than phoenix-specific creditor receipts, but they show that monetary baselines can be stated when the Service chooses to state them.

The present rule does not prohibit a business or its assets being sold to a connected person. The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, in force from 30 April 2021, permit a substantial connected-person disposal within the first eight weeks of an administration where creditors approve it or the purchaser obtains an evaluator’s report. Insolvency Service guidance says an administrator may proceed even where the evaluator is not satisfied that the consideration and grounds are reasonable, provided the administrator gives reasons. The new strategy proposes no amendment to that rule.

Nor does recovery equal payment to trade creditors. HMRC’s published explanation of the statutory order places fixed-charge creditors, after realisation costs, ahead of insolvency practitioners’ fees and expenses, preferential creditors, HMRC’s secondary preferential claims, the prescribed part, floating-charge creditors and ordinary non-preferential creditors. The strategy does not require the taskforce to report gross recoveries, office-holder costs, secured claims and the resulting unsecured dividend separately. A sum returned to an estate may therefore produce no distribution to the suppliers whose debts remained in the failed company.

The same absence of control appears in the practitioner agenda. The strategy promises to measure administrative burdens on businesses and insolvency practitioners while maintaining standards, but identifies neither the burden to be removed nor the supervisory safeguard that will replace it. The Annual Review of Insolvency Practitioner Regulation 2025 separately recorded 966 complaints received by the gateway and 166 referrals to recognised professional bodies; 49 referrals concerned liquidations and 21 concerned administrations. The strategy sets no complaint-handling, monitoring or disciplinary target against which reduced practitioner requirements can be tested.

The £25 million allocation gives the Service and its partner agencies a funded enforcement programme, while practitioners may benefit if reporting or compliance work is reduced. The documents do not state how much recovered money will reach unsecured creditors after secured claims and office-holder costs. Until that measure is published, the strategy records activity by the regulator without answering the creditor’s question: what will be stopped, what will be recovered and who will be paid.

What it changes

• The phoenixism operation has public funding and a staffing commitment, but no published target for connected sales prevented, assets recovered or creditor distributions.
• Connected-party administration sales remain permitted under the 2021 regulations through creditor approval or an evaluator’s report; the strategy changes no sale rule.
• Future agency reporting may measure recovery value and investigation speed, but the strategy supplies no baseline, methodology or publication timetable.
• The Service has opened a programme to reduce practitioner burdens without identifying which requirements may be removed or what additional supervision will protect creditors.