UK Regulator Liquidates Two Commercial Collectors

The UK business community now has one less call to worry about as two debt recovery services have been wound up in the High Court following an investigation by Companies Investigation Branch (CIB) of the Insolvency Service, the British agency that handles company bankruptcies.

Debt Recovery U.K. Limited and Waterfront Financial Limited were Liverpool-based companies operating as commercial debt collectors. The companies offered a debt recovery service to businesses they recruited by way of cold-calling. CIB’s investigation found that Debt Recovery U.K. Limited was an abandoned company whose financial position and losses to its clients could not be established because the company’s accounting records had not been preserved. Waterfront Financial Limited succeeded Debt Recovery UK, operating a similar business under the same control and using the same employees.

Waterfront Financial Limited induced clients to sign up for its services by making a number of misrepresentations and had received in excess of £400,000 ($788,000) from clients in advance fees. The company was found to be insolvent keeping and using as working capital the debts it had collected on behalf of its clients.

In winding the companies up the High Court held that this was an operation intended to cheat customers.

The Insolvency Service carries out confidential enquiries on behalf of the British Secretary of State for Trade and Industry, through Companies Investigation Branch. The Service also authorizes and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.