Hauliers phoenix from the flames

There we were, naïve individuals on the blower looking for recompense. We called and we called – we even took it in turns – but alas no one answered the phone. Eventually we stopped calling, and decided to get the debt collectors involved. It was a last port of call.

They came around, assessed the debt of the company of which we were a creditor, then came back a while later to tell us that while the name of the company still existed it was – to all intents and purposes – a new company minus the noose of debt around its neck.

“They have Phoenixed,” came the summary from the debt collector.

“Eh!” came my reply. I wasn’t even sure what it meant.

How so? We asked as one (well at the time it was only me but later when I explain what had happened to senior management they proclaimed as one ‘how so?’).

The company, a haulier with a workshop, had collapsed owing thousands. Bankrupt, it emerged as a ‘commercial entity’ to continue trading akin to its predecessor giving the appearance of ‘business as usual’.

As they had owed us money for ‘assets’ they had to go somewhere else to buy their ‘assets’. That it was not obliged to pay for the failed company’s losses we were left out of pocket.

In fairness, the debt collector didn’t charge us for his time. We looked into it and it was all above board. Phoenix companies are common practice, although not common enough to warrant a change in the laws to stop it from being abused.

Word was circulated about this nefarious state of affairs and the company in question did find some doors firmly closed. Other out-of-pocket business sought legal advice claiming that a director was disqualified and personally bankrupt but the person in question was neither.

Over the course of time the haulier/workshop recovered both its good repute and relationships with some, but not all, of its former creditors.

So, if you have been the victim of this then I suggest the following advice.

If you are a trade creditor owed funds from the insolvency of a company but can’t contact the company or get paid don’t give up on it.

Tell the Financial Conduct Authority (FCA) especially if you believe that the company is withholding information about its assets, or if you have information about the conduct of the company contact the official receiver or insolvency practitioner and tell them.

To find out if a director is disqualified, search the disqualified directors register at Companies House.

You may not get paid, but you might well get even.