Companies repeatedly going bust. It is one of the biggest causes of frustration in our industry. There are many of us out there that try our very best to run our companies the best way possible. To ensure the best products are fitted by the best installers and to try and provide the best customer service and after care possible. It’s a hard job, but there are plenty of us out there which do a very good job. But then when we see our competitors constantly changing their name or going bust on a regular basis – without penalty, it really does test the patience of those trying to do things right.
One of the biggest comments to come out of these bankruptcy debates is the lack of concrete steps to prevent the bent directors quickly wrapping up a company and starting a new one within 24 hours. Surely it shouldn’t be that easy to avoid the penalties?
I see bankruptcy situations in two different ways. In one respect there are hard working companies that have gone to the wall due to unfortunate circumstances and tough economic conditions. These are things which sometimes cannot be helped and probably no one can be blamed.
On the other hand, there are those companies run by directors and bosses who are simply not cut out to run a business, either because of their ineptitude or due to their own self-interests and greed. In it to make a quick buck then let the business go to rack and ruin all just to line their pockets.
The idea I had to try and stop and weed out the repeat phoenix-ers was for the tax office to set up and investigations department. For example, in the future if a company was to legitimately go bust, they would be allowed ONE chance to either set back up under careful watch of HMRC or quietly go find employment. If the new company goes bust again, HMRC would carry out a very thorough investigation as to why the business failed again. If it was down to external circumstances such as economic factors or customers illegitimately not paying, then the directors of that business should be able to try again. If that investigation finds that the directors behaviour the cause of the failure of that business, then a lengthy, even full-time ban should be imposed on that person to stop them ever owning a business again. This should also include a clause which would stop someone owning a business but putting that ownership in another name, like their wife’s for example!
What these investigations would aim to do would be to stop the cereal phoenix-ers from ever owning a business again. But also, to help force business owners to take a real look at how they run their business to make sure that they would never come under the scrutiny of these investigations. Something like this might seem a bit harsh, but if it helps kill off all the dead wood this industry seems to have collected over the years, then so be it.
The hard working companies out there are becoming very sick and tired of plugging away hard every day, just to see their competitors seemingly getting away with all sorts of malpractice and wrong-doings. Something has to be done.
In my opinion, our industry fuels the Pheonixing culture. Far too often a systems supplier or hardware distributor will offer credit terms to the same guy that just took them for thousands when they bust their previous company. Their justification is that they can slowly claw back what they lost. Only if he doesn’t do it again, which he probably will. I agree, legitimate failure of a company due to harsh trading conditions should be looked upon more sympathetically. The pheonixers though should be blackballed by the industry. Any suppliers that break the ban should also be blackballed. I’m sure… Read more »
I agree with what you say and that the serial phoenix-ers should not be allowed to be Directors again in the future and the challenge is how to weed these ones out! However, there is another side to starting again and I can actually speak from experience on this point. I joined my “family” business a few years ago as my sister (Co-Director) was struggling to keep on top of the business administration and she needed help which I was able to do successfully but through a series of issues all hell broke loose. It started with a main contractor… Read more »
Firstly, directors who start a new company with the same or similar sounding name become PERSONALLY LIABLE for the old debts if they don’t have permission from the creditors of the closing company, section 126 of the Insolvency act I understand. Second, I favour directors having personal liability for consumer deposits. If the company goes bust they become liable. They could discharge this liability with adequate consumer protection, GGF, DGCOS, IBG’s that way every consumer is protected if the company has any integrity. We still see companies using the same name, repeatedly on http://www.doubleglazingcompanies.com but every limited company can be… Read more »
We had permission for everything that we did and we did it all legally and above board, all our deposits and guarantees are insurance backed and all our suppliers supported us (as they were all paid) and continue to trade with us today.