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More firms wound up for abusing insolvency regime 13 September 2013

Eight companies have been wound up in the public interest by the High Court as part of on-going investigations by The Insolvency Service over the last six months.

Chiltern Consulting Ltd, Chilcons LLP, and Source Financial Ltd are the latest in a number of firms to be wound up for promoting “misleading, inaccurate and financially damaging information” regarding pre-pack administrations.

The three firms were put into compulsory liquidation yesterday (12 September) for promoting pre-pack administration to businesses in financial trouble in “an inaccurate and misleading way”.

Graham Horne, deputy chief executive at The Insolvency Service, said: “The rescue of businesses in trouble is at the heart of the insolvency regime and every effort should be made to ensure that struggling but viable companies are turned around wherever possible, by getting good quality advice.

“Trust is the cornerstone of business relationships and the eight companies we have shut down violated that trust by giving misleading and inaccurate information to financially vulnerable businesses. They are now paying the penalty.

“The action we have taken is part of an on-going operation and further action is anticipated in the future.”

Chiltern Consulting, Chilcons, and Source Financial were found to have sent over 4,000 unsolicited emails a month directing businesses to – a website run by Chilterns that contained “inaccurate, misleading and incomplete information” on the use of pre-pack administrations.

The marketing material also “risked bringing the insolvency regime into disrepute by making generalised, unsubstantiated and disparaging remarks about the insolvency profession.”

Five other firms – Adam Smith Business Development Ltd, Company Corporate Transfer Ltd, Genesys 2000 Ltd, The Recovery Partnership Ltd and TAG (Chesterfield) Ltd – have also been wound up as part of the investigation.

The conduct of six insolvency practitioners connected to the companies is also due to be assessed by the relevant recognised professional bodies (RPBs).

Graham Rumney, chief executive for insolvency trade body R3, said: “We welcome the court’s decision to consent to the compulsory winding up of these companies in the public interest.

“This outcome is the fruition of a number of years’ work by The Insolvency Service to clamp down on companies which abuse trust in the insolvency regime.”



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