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More action being taken against illegal phoenix companies

The number of directors who have been confronted after re-launching their businesses as phoenix companies has risen by almost 100 per cent in the last 12 months, according to legal firm RPC.

Business regulator the Insolvency Service (IS) acted against 163 cases in 2012/13 where firms had adopted names of companies that had recently gone into liquidation – an increase of 85 on the previous year.

The figures highlight the need for business owners to work closely with their accountants in Prenton, or elsewhere in the North West, to ensure they’re operating within the guidelines and regulations.

The insolvency rules which came into practice in 1986 underwent changes in the 2002 Enterprise Act. The updates were put into place to simplify the process of saving insolvent businesses from having to go into liquidation.

Vince Cable, the Business Secretary, recently proposed that increased culpability should be placed at the hands of directors, with worries over company ownership opacity.

If the proposals are acted upon, it would mean the introduction of a central register with detailed records kept of everyone with a share in a company of more than 25 per cent.

Vivien Tyrell, a partner of RPC, explained that the behaviour of those who have been confronted isn’t fair on customers, creditors or competitors. She said that she was encouraged to see the IS clamping down on the breaches.

Tyrell went on to say that insolvency professionals have not only survived but have forged strong communication lines which allow them to report any wrongdoings to the Insolvent Service when necessary.

Posted by Louise
October 2, 2013
Research & Statistics

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