Introduction
The Insolvency Service’s December 2025 company insolvency statistics report 23,938 registered company insolvencies in England and Wales in 2025, broadly similar to 2024 and remaining at levels last seen during the 2008–09 recession. In December alone, there were 1,671 insolvencies, consisting predominantly of creditors’ voluntary liquidations, alongside administrations and a small number of Company Voluntary Arrangements (CVAs), while restructuring plans and moratoriums remained comparatively rare. The dominance of terminal procedures over rescue mechanisms highlights an ongoing landscape of financial strain and raises questions about the practical accessibility of formal restructuring tools.
Against this empirical backdrop, this article analyses the choice between CVAs, pre-pack administrations and restructuring plans in the UK, examining how recent insolvency trends shape procedural strategy. It argues that the prevailing pattern of procedural choice reflects a deeper structural imbalance within the corporate rescue framework. In the SME and mid-market space, advisers increasingly default to pre-pack administrations not solely because they are economically optimal, but because alternative rescue mechanisms have become procedurally fragile, creditor-sensitive, or prohibitively expensive. The result is a system that prioritises transactional certainty over participative legitimacy, calling into question whether the statutory rescue culture is being meaningfully realised for smaller businesses.
The Data Backdrop: what SMEs are actually using
Recent data on insolvency in the UK shows that corporate insolvency levels continued to be high through 2024 and 2025, with 23,872 registered company insolvencies in England and Wales in 2024 and 23,938 in 2025, both figures closely mirroring the elevated levels seen since the pandemic period. Within these totals, the number of Company Voluntary Arrangements (CVAs) has remained a very small proportion, with 202 in 2024 (less than 1% of cases) and 186 in 2025, a decline from the previous year, despite overall insolvency figures still being high. Conversely, the adoption of pre-pack administrations has significantly increased, with official data showing the number of pre-pack sales growing from 201 in 2021 to 628 in 2024, marking an increase of over 200%. Meanwhile, restructuring plans under Part 26A continue to be rare, with only 26 such plans registered at Companies House by early 2025.
Administrations still make up a substantial share of formal insolvencies, with pre-packaged sales becoming a more prominent subset within this category. The frequency of connected-party pre-packs has also been on the rise, indicating a consistent preference among advisers for processes that provide speed and transactional certainty. Regulatory measures aimed at enhancing transparency, such as stricter disclosure requirements and the necessity for independent evaluator reports, seem to have tempered but not fundamentally changed this trend.
In contrast, the use of Company Voluntary Arrangements has only modestly rebounded from the historically low levels seen during and right after the COVID-19 period. Although CVAs maintain a solid theoretical basis as a rescue solution for viable businesses, their limited adoption highlights ongoing structural challenges. These include increased creditor opposition, the risk of failing to secure the required voting majority, and the practical difficulty of sustaining performance over a multi-year repayment period.
Restructuring plans under Part 26A of the Companies Act 2006 are still uncommon overall and primarily involve larger mid-market cases with complex capital structures. The expenses related to court oversight, valuation evidence, and engaging multiple creditor classes continue to serve as significant obstacles to adoption within the SME sector.
Together, these figures show that although multiple restructuring tools are available in statute, in practice SME usage remains concentrated on a narrow range of procedures, particularly pre-pack administrations.
The Three Tools in Context
Company Voluntary Arrangements (CVAs)
A CVA is a statutory contract between a company and its unsecured creditors, supervised by an insolvency practitioner and approved by a requisite creditor majority. In the SMH and mid-market context, CVAs are typically used where the underlying business remains viable but is weighed down by historic liabilities, such as arrears to landlords, HM Revenue & Customs, or trade creditors.
The principal strength of a CVA lies in continuity and control. Directors usually remain in office, allowing the business to continue trading while debts are compromised over time. The formal creditor vote also lends the process a degree of democratic legitimacy. However, CVAs face persistent challenges. Creditor fatigue, particularly following years of retail and leisure CVAs, has reduced creditor appetite. Landlord resistance remains a structural weakness, and the long-term nature of CVAs exposes businesses to execution risk if trading conditions deteriorate.
The decline of CVAs appears linked to greater resistance from key creditor groups, particularly landlords and HMRC, rather than inherent defects in the statutory mechanism. Frequent use of CVAs to impose significant compromises on landlords and HMRC has increased creditor scepticism and made approval more difficult to secure. The limited uptake of CVAs therefore reflects practical voting risk and reduced creditor support, factors that advisers must consider when assessing whether a proposal is viable.
Pre-Pack Administrations
A pre-pack administration involves negotiating the sale of a company’s business and assets before the appointment of administrators, with the transaction completing immediately on appointment. In practice, this process is frequently used where the business requires an immediate solution to preserve value, protect jobs, or maintain customer confidence.
Connected-party sales are common in the SME market and are regulated through the Statement of Insolvency Practice 16 (SIP 16) disclosures and the Administration (Restrictions on Disposal etc.) Regulations 2021, which require either creditor approval or an independent evaluator’s report. The key advantages of pre-packs are speed, certainty, and value preservation. However, they carry notable downsides: limited upfront creditor engagement and the risk of reputational damage, particularly where the transaction is perceived as “phoenixing”.
The prevalence of pre-pack administrations in the SME market also warrants scrutiny of adviser incentives. Pre-packs offer a high degree of procedural control, reduced execution risk, and a compressed timetable, all of which align closely with advisers’ professional risk management objectives. While these features may coincide with value preservation, they also reduce exposure to creditor challenge and proposal failure. This alignment between commercial efficiency and reduced execution risk means that pre-packs may be preferred in part because they minimise the likelihood of creditor challenge and proposal failure.
Restructuring Plans
Restructuring plans under Part 26A of the Companies Act 2006 provide a court-supervised mechanism for compromising creditor claims, including through cross-class cram-down. This makes them particularly powerful where creditor interests are misaligned.
Their strengths lie in flexibility, judicial oversight and the ability to bind dissenting creditors. However, restructuring plans remain largely inaccessible to most SMEs due to cost, complexity, and procedural burden. As a result, their use is currently confined to larger mid-market cases with sufficiently complex capital structures to justify the expense.
The limited penetration of restructuring plans in the SME sector, therefore, reflects more than issues of scale. It exposes a structural mismatch between the procedural design of Part 26A and the economic realities of smaller businesses. Although Part 26A offers significant flexibility, its cost and evidential requirements make it commercially unrealistic for most SMEs, with use largely confined to larger mid-market companies.
Cost and Speed as Determinative Factors in Procedural Choice
Cost and speed have emerged as central considerations in the selection of restructuring and insolvency procedures within the SME and mid-market sector. Unlike larger corporates, SMEs typically operate with limited liquidity, restricted access to rescue finance, and heightened sensitivity to prolonged periods of uncertainty. As a result, the theoretical merits of a given procedure are often secondary to its practical affordability and the speed with which it can deliver a stable outcome.
CVAs occupy an intermediate position on both metrics. While CVAs avoid the direct costs associated with court involvement, they require sustained professional oversight over a multi-year period. The cumulative cost of supervision, combined with the ongoing diversion of management time, can be significant. Moreover, the extended duration of CVAs increases exposure to adverse market conditions, rendering them vulnerable to failure where trading performance does not stabilise promptly.
Pre-pack administrations, by contrast, are characterised by speed and transactional finality. The negotiation and documentation of the sale occur before the formal insolvency event, allowing completion to take place immediately upon the appointment of administrators. Although professional fees may be front-loaded, the expense of ongoing supervisory obligations often results in lower aggregate costs. From an economic perspective, pre-packs minimise the risk of value erosion associated with trading in insolvency, which is particularly acute in asset-light or reputation-sensitive businesses.
Restructuring plans represent the most resource-intensive option. The requirement for court hearings, valuation evidence and class-based creditor engagement generates substantial professional costs. These costs are often disproportionate in the SME context, where the total quantum of debt may be insufficient to justify the expense. Additionally, the procedural timetable of restructuring plans is inherently slower, reflecting the need to accommodate judicial scrutiny and contested creditor positions.
These dynamics help to explain why, in practice, advisers frequently prioritise procedures capable of delivering immediate certainty, even where this constrains participative engagement. While CVAs and restructuring plans may better align with the normative objective of corporate rescue, cost and speed continue to exert a decisive influence on procedural choice, reinforcing a pragmatic, outcome-oriented approach among advisers.
The emphasis on cost and speed, while commercially rational, means that rescue in the SME context often takes the form of a business sale rather than a negotiated long-term restructuring.
Control and Reputational Considerations
The degree of managerial control retained during a restructuring process and the associated reputational consequences play a significant role in determining procedural choice in the SME and mid-market context. These factors are particularly salient where business value is closely tied to the continued involvement of incumbent management or to ongoing relationships with customers, suppliers and employees.
Company Voluntary Arrangements are distinctive in permitting directors to remain in control of the company throughout the restructuring process. This continuity can facilitate operational stability and preserve stakeholder confidence, particularly where the distress is perceived as temporary or externally driven. From a governance perspective, however, the retention of control can generate creditor concerns regarding oversight and accountability, especially in cases involving prior mismanagement.
Pre-pack administrations involve a formal displacement of directors upon the appointment of administrators, although in practice, management often re-emerges in control of the business through a connected-party acquisition. While this structure can preserve managerial expertise and operational knowledge, it has given rise to persistent reputational concerns. Connected-party pre-packs are frequently criticised for enabling so-called “phoenix” arrangements, whereby liabilities are shed while the business continues substantially unchanged. Such perceptions may undermine trust among unsecured creditors and trade counterparties, notwithstanding compliance with regulatory safeguards.
Restructuring plans present a contrasting model, combining debtor-in-possession control with intensive judicial oversight. Directors retain operational control while the restructuring is negotiated, but the process is subject to court approval and creditor class voting. This dual structure can enhance the perceived legitimacy of the outcome, particularly in contested cases, and may mitigate reputational damage by framing the restructuring as a court-sanctioned compromise rather than an insolvency-driven asset sale.
Reputational considerations have tangible commercial consequences. In the SME sector, access to trade credit, supplier cooperation and customer confidence are often critical to post-restructuring viability. Procedures perceived as opaque or creditor-hostile may impair these relationships, even where they deliver short-term economic efficiency. Conversely, processes that emphasise transparency and participation may support longer-term stability.
Control and reputation, therefore, interact in shaping procedural choice. Advisers must assess not only the legal and economic consequences of a given process, but also its likely reception among key stakeholders whose ongoing support may be essential to the success of any restructuring.
Creditor Democracy and Procedural Legitimacy
Creditor participation and the perceived legitimacy of restructuring outcomes are central to the functioning of UK insolvency law. While efficiency and value preservation are important objectives, the degree of creditor involvement differs significantly between these procedures.
Company Voluntary Arrangements are explicitly premised on creditor consent. Approval requires a statutory majority of 75 per cent in value of those creditors voting, supplemented by safeguards designed to protect minority interests. In principle, this voting mechanism confers democratic legitimacy on the outcome. In practice, however, creditor participation in CVAs may be uneven, with outcomes often shaped by the voting behaviour of a small number of significant creditors. Furthermore, the scope for challenge, while limited, can introduce uncertainty and undermine confidence in the process.
Pre-packaged administrations offer the least opportunity for creditor involvement before completion. Creditors are not consulted before the completion of the sale, and their role is confined to post-event scrutiny through disclosure mechanisms. Although the administrator is under a statutory duty to act in the interests of creditors as a whole, the absence of a formal voting process has generated sustained criticism. Regulatory responses, including enhanced disclosure requirements and independent evaluator opinions for connected-party sales, have improved transparency but have not eliminated criticism that creditors are excluded from the initial decision to sell the business.
Restructuring plans under Part 26A of the Companies Act 2006 adopt a hybrid approach, combining creditor class voting with judicial oversight. Creditors are grouped into classes based on their rights, and each class votes on the proposed compromise. The availability of cross-class cram-down allows the court to override dissenting classes, subject to statutory fairness tests. Although cross-class cram-down limits the ability of dissenting creditors to block a plan, judicial scrutiny and statutory fairness tests provide safeguards against unfair outcomes.
In the SME and mid-market context, this divergence is particularly acute. Limited resources magnify the consequences of procedural design, meaning that choices favouring efficiency over participation are not merely technical, but determinative of whether creditor voice is meaningfully preserved at all. CVA processes focus on obtaining creditor approval, but they may struggle to provide certainty. Pre-pack arrangements emphasise efficiency while potentially sidelining creditors’ input. Restructuring plans aim to balance these conflicting priorities with the help of judicial oversight. In the SME and mid-market context, where resources are constrained and stakeholder relationships are critical, the balance struck between creditor democracy and procedural effectiveness remains a central determinant of procedural choice.
Towards a Structured Adviser Decision-Making Framework
While advisers routinely balance multiple factors when selecting a restructuring procedure, not all considerations should carry equal weight. In the SME and mid-market context, excessive prioritisation of immediacy and cost may produce outcomes that preserve short-term value at the expense of long-term viability and stakeholder trust. A structured framework must therefore incorporate not only feasibility, but proportionality and legitimacy as guiding principles.
The preceding analysis demonstrates that the choice between a Company Voluntary Arrangement, a pre-pack administration and a restructuring plan cannot be reduced to a purely doctrinal inquiry. Rather, it requires a contextual assessment of economic viability, stakeholder dynamics and procedural constraints. This section proposes a structured framework to guide adviser decision-making in the SME and mid-market context.
The starting point is an assessment of underlying business viability. Where the company is operationally sound but burdened by historic unsecured liabilities, a CVA may offer an appropriate mechanism for compromise while preserving corporate continuity. Conversely, where financial distress is acute and trading losses threaten rapid value erosion, the immediacy of a pre-pack administration may outweigh its participatory deficiencies. Restructuring plans are most suitable where viability depends on addressing complex or contested creditor arrangements that cannot be resolved through consensual mechanisms.
Secondly, advisers must evaluate the urgency of intervention. Time-sensitive distress favours procedures capable of delivering rapid certainty. Pre-pack administrations are uniquely positioned to minimise delay. Where liquidity allows for a longer restructuring horizon, CVAs and restructuring plans may offer greater scope for negotiated outcomes and stakeholder alignment.
Thirdly, reputational considerations and the importance of ongoing stakeholder relationships must be weighed. If the post-restructuring trade is dependent on creditor goodwill, procedures perceived as legitimate and transparent may enhance long-term stability. This may favour CVAs or restructuring plans over pre-pack administrations, particularly connected-party transactions.
Finally, advisers must consider proportionality. The costs and complexity of restructuring plans render them unsuitable for many SMEs, notwithstanding their doctrinal advantages. Procedural choice must therefore reflect not only legal efficacy but also economic realism.
Taken together, this framework underscores the need for advisers to adopt a holistic, fact-sensitive approach. In the SME and mid-market space, procedural choice functions as a strategic intervention rather than a purely legal selection, requiring careful calibration of competing objectives.
Conclusion
This article has examined the choice between Company Voluntary Arrangements (CVAs), pre-pack administrations and restructuring plans in the SME and mid-market context, situating doctrinal analysis within recent empirical trends. Evidence from 2024 to 2026 indicates a clear practical preference for procedures that prioritise speed, cost efficiency and transactional certainty, particularly pre-pack administrations, despite continuing concerns about creditor participation and legitimacy.
Although CVAs and restructuring plans better reflect the normative ideal of a participative rescue culture, their use is constrained by creditor scepticism, execution risk, cost and procedural complexity. As a result, procedural choice in this space is driven less by doctrinal design than by structural and economic pressures. The continued dominance of pre-packs risks marginalising creditor democracy and entrenching a transactional model of rescue. Without reforms to enhance creditor confidence and improve proportionality, the gap between the aspirational rescue framework of UK insolvency law and its operation in the SME sector is likely to endure.
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