When a company enters Administration, it’s often because the business is in financial distress but still holds value. Administration allows that value to be preserved or realised under the control of a licensed insolvency practitioner (the administrator).
One of the key ways administrators achieve this is through selling assets, sometimes the whole business and sometimes just its parts.
The purpose of selling assets in Administration
The administrator’s legal duty is to act in the best interests of creditors as a whole, not the directors or shareholders.
That means every sale must be designed to achieve one of three statutory objectives, in this order of priority:
- Rescue the company as a going concern, ideally keeping it trading under new ownership.
- Achieve a better result for creditors than if the company were liquidated.
- Realise assets to repay secured or preferential creditors when the first two options aren’t viable.
What assets can be sold?
Almost anything of value within a company can be sold in Administration, provided the sale is properly managed and the proceeds go to creditors.
Common examples include:
Tangible assets: Machinery, stock, office furniture, vehicles, IT equipment, fixtures and fittings.
Property: Freehold or leasehold premises, often a key source of value in retail, hospitality or manufacturing businesses.
Contracts: Customer contracts, supplier agreements or licences can sometimes be transferred, depending on their terms.
Intellectual property: Patents, trademarks, designs, software and websites.
Goodwill: The brand name, customer lists, and reputation built up by the business.
Work in progress: Partly completed jobs or projects that still have commercial worth.
The administrator will review each category, assess market interest and decide whether a sale can generate a better outcome than closure.
Whole business sales vs asset-only sales
Sales in Administration broadly fall into two categories.
1. Selling the whole business as a going concern
This happens when the core operations are viable but the current structure or debt level isn’t. The administrator might sell the business (including assets, contracts, stock and staff) to a buyer who can continue trading.
This can happen through what’s known as a Pre-Pack Administration, where the sale is agreed in advance and completed immediately once the administrator is appointed. It can ensure a seamless handover, keeps jobs and preserves relationships with suppliers and customers.
2. Selling individual assets
If rescuing the business isn’t realistic, the administrator will sell individual assets to recover as much value as possible. This could mean auctioning stock, selling property or transferring intellectual property to interested buyers.
Either way, the guiding principle is always to maximise returns for creditors in a transparent and fair process.
Can directors or connected parties buy assets?
Yes, directors or connected parties can buy assets from a company in Administration. But only under strict rules.
These sales are allowed because directors often understand the business best and may be in a good position to keep it going. However, they must meet three key tests:
- Independent valuation: The assets must be sold at fair market value, supported by a professional valuation.
- Transparency: The sale process must be fully documented and reported to creditors.
- Creditor benefit: The administrator must show that the transaction achieves the best outcome for creditors as a whole.
If these safeguards aren’t followed, the transaction can be challenged as a transaction at an undervalue or a preference payment, and directors could face personal consequences.
Handled properly though, a director buy-back (sometimes referred to as “phoenixing”) is a legitimate way to preserve jobs, contracts and goodwill while drawing a line under old debts.
How are assets valued?
Administrators work with independent agents or RICS-qualified valuers to establish fair market value. The valuation considers factors such as:
- Condition and market demand
- Forced-sale value versus normal market value
- Ongoing contracts that might enhance value
- Location and logistics for physical assets
This ensures that any sale can withstand later scrutiny from creditors or regulators like the Insolvency Service.
Transparency and documentation are essential. Every sale must be evidenced through professional valuation reports and formal sale agreements.
Can assets be sold before Administration starts?
In some cases, yes. But only if handled carefully. When a sale is arranged before the formal appointment of the administrator and completed immediately after, it’s called a Pre-Pack Administration.
Pre-Packs are common in retail and manufacturing where delays could destroy value (for example, perishable stock or ongoing contracts). They allow for continuity of operations, protecting jobs and preserving goodwill.
However, since 2021, Pre-Pack Administrations to connected parties must be independently reviewed by a qualified evaluator. This rule was introduced under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, ensuring accountability and fairness in the process.
What happens to employees?
If a business or part of it is sold as a going concern, employee contracts usually transfer automatically to the buyer under Transfer of Undertakings (Protection of Employment) Regulations (TUPE).
That means employees keep their existing terms and continuity of service, giving much-needed stability during a turbulent period. If the sale is purely of assets rather than the ongoing business, TUPE won’t apply and staff may be made redundant, with claims dealt with through the Administration process.
What can’t be sold?
Some things are excluded from sale, including:
Assets subject to fixed charges: These are often controlled by secured lenders, who must consent to the sale.
Certain licences or contracts: Not all agreements are transferable. For example, some franchise or software licences.
Personal guarantees: These remain the responsibility of the individual, not the company.
Legal claims or causes of action: Only the administrator can pursue or settle these.
Anything that can’t be sold may still be used to support negotiations with creditors or potential buyers.
Administration vs liquidation
In liquidation, the company has ceased trading and assets are sold purely to settle debts. In Administration, the aim is broader: to rescue the company or achieve a better overall result.
That’s why administrators often focus on preserving the business as a going concern, even if that means selling it quickly. In liquidation, by contrast, there’s no ongoing business to save, just assets to sell and debts to clear.
Key takeaways: which assets can be sold in an Administration?
- Almost any company asset — tangible or intangible — can be sold if it benefits creditors
- Sales can include stock, property, contracts, IP, goodwill and brand name
- Directors can buy assets back if it’s transparent and independently valued
- Employees may transfer to the buyer under TUPE if the business continues
- Every sale must comply with insolvency law and stand up to later review
Get advice on what can be sold in an Administration
Administration isn’t just a way to wind things up. It’s a structured process designed to protect value and jobs where possible. Selling assets can be part of that recovery, provided it’s handled properly and transparently.
For directors, the key is to act early and work with a licensed insolvency practitioner. We’ll assess what can realistically be sold, whether the business can be rescued and how to protect you from personal risk.
Call our experts for free, confidential advice on whether Administration could be the right choice for your company.
