A Manchester-based company offering what it called ‘alternative insolvency solutions’ has been wound up by the High Court for operating without a licence.
Save Consultants Ltd faced an investigation by the Insolvency Service after suspicions were raised that it was acting as an insolvency practice without the authority to do so.
The company operated two now-defunct websites promising to help both individuals and businesses deal with financial difficulties, and claimed the company’s leadership had worked in corporate restructuring and insolvency for a number of years.
One of the sites described the company’s services as “a unique alternative to formal corporate insolvency in the UK”, detailing how it could sell a struggling business in as little as 48 hours for a one-off fee.
However, the investigation found that none of Save Consultants’ current or former directors were licensed insolvency practitioners. Moreover, directors refused to cooperate with investigators in disclosing and explaining its trading practices.
At a hearing at the High Court in Manchester on 2nd July, the court agreed with the findings of the Insolvency Service investigation that the company was advertising insolvency services without a licence, and ordered it to be wound up in the public interest. An Official Receiver was appointed to handle the winding up process.
Threatening the integrity of the insolvency system
In summing up the case, David Usher, Chief Investigator at the Insolvency Service, said Save Consultants operated in a way that threatened the integrity of the insolvency system.
Insolvency services are carefully regulated in the UK under the terms of the Insolvency Act 1986. Only licenced professionals can act as office holders in official insolvency proceedings such as administration, receivership, voluntary or compulsory liquidations, or presiding over company voluntary arrangements (CVAs).
The licensing of insolvency practitioners is intended to ensure that those who deal with businesses in financial distress are fit to do so, with appropriate levels of training and experience in both insolvency law and corporate restructuring. The regulated insolvency regime itself aims to provide consistency and transparency in all proceedings, with the ultimate aim of getting better outcomes for both struggling businesses and their creditors.
One of the requirements of the regime is that fees for insolvency practitioners are agreed as part of each case with the involvement of the courts, avoiding the risk of service providers charging exploitative up-front fees to businesses already in financial distress.