Two closely-related providers of insolvency and accounting services have been wound up in the public interest by the High Court for putting clients’ money at risk.
TAG (Chesterfield) Limited (TAG) and The Recovery Partnership Limited traded under the name ‘The Insolvency Group’, despite being two separate businesses.
Scott Crighton, case supervisor at the Insolvency Service, said: “These companies offered solutions to businesses that were experiencing financial difficulties.
“They were operated in such a way as to undermine the insolvency regime by making it unclear where the lines of responsibility were drawn and by failing to adequately ring fence client funds.”
An investigation by The Insolvency Service found that due to the companies’ setup, there was confusion as to which company was responsible for which client accounts.
The books and records kept by both companies also failed to properly explain the use of clients’ money.
TAG was incorporated on 16 September 2010 and initially offered both accounting and insolvency services using the trading names ‘The Accounting Group’ and ‘The Insolvency Group’.
The Recovery Partnership Limited was incorporated on 31 March 2011 to take over the insolvency side of TAG’s business, appointing a licensed Insolvency Practitioner as one of its co-directors.
One case identified by investigators found that TAG received £150,000 from a client company that later went into liquidation – by the time of the liquidation these funds had been substantially reduced by payments that were not explained.
One of the company directors failed to provide information to the investigators, particularly banking and other financial information, and by not disclosing that money had been withdrawn from client accounts.