Part B2 Regression analysis of traditional administration with a concern sale to assess the procedure’s ability to deliver viable purchasing companies and compare with the analysis of the pre-pack sample. This part of the looks at the failure rates of purchasers from a traditional administration going concern sale and identifies which characteristics change the chances of failure. The dependent variable in the regression analysis is a binary variable measuring whether the purchaser is continuing in operation (0) or has succumbed to a further insolvency procedure or ceased trading (1). The independent variables are: Whether the sale was to a connected Whether there was deferred consideration Size of the company entering administration (turnover and employee numbers) Age of business prior to pre-pack The timing of the dependent variable relative to the data in the dependent variable is lagged at 12 months, 24 months and 36 months. Part C Finally, is a combined regression analysis which considers the impact of whether, all else being equal, failure rates differ between business sales after and trading administration. III Summary of Outputs and Analysis The data points listed (Parts A1 and B1) for, respectively pre-packs and traditional going concern sales, have been provided on respective excel spreadsheets. The most significant findings are summarised and analysed below. These findings are followed by respective regression analyses (Parts A2 and B2) along with an explanation of the model selected which underpins the regression analysis. Finally, there is a combined regression analysis (Part C) which considers the impact of whether a sale takes place in a pre-pack or trading administration on the subsequent failure of the purchaser. Part A Data was collected for 497 companies utilising pre-pack administrations in 2010, with 499 cases being identified to reflect a small incidence of two unique business sales
Part B2 Regression analysis of traditional administration with a concern sale to assess the procedure’s ability to deliver viable purchasing companies and compare with the analysis of the pre-pack sample. This part of the looks at the failure rates of purchasers from a traditional administration going concern sale and identifies which characteristics change the chances of failure. The dependent variable in the regression analysis is a binary variable measuring whether the purchaser is continuing in operation (0) or has succumbed to a further insolvency procedure or ceased trading (1). The independent variables are: Whether the sale was to a connected Whether there was deferred consideration Size of the company entering administration (turnover and employee numbers) Age of business prior to pre-pack The timing of the dependent variable relative to the data in the dependent variable is lagged at 12 months, 24 months and 36 months. Part C Finally, is a combined regression analysis which considers the impact of whether, all else being equal, failure rates differ between business sales after and trading administration. III Summary of Outputs and Analysis The data points listed (Parts A1 and B1) for, respectively pre-packs and traditional going concern sales, have been provided on respective excel spreadsheets. The most significant findings are summarised and analysed below. These findings are followed by respective regression analyses (Parts A2 and B2) along with an explanation of the model selected which underpins the regression analysis. Finally, there is a combined regression analysis (Part C) which considers the impact of whether a sale takes place in a pre-pack or trading administration on the subsequent failure of the purchaser. Part A Data was collected for 497 companies utilising pre-pack administrations in 2010, with 499 cases being identified to reflect a small incidence of two unique business sales
Report_to_the_Insolvency_Service_on_Pre-Pack_Administrations_-_Res....docx