Directors who dissolve companies to avoid paying workers or pensions could face hefty fines or be disqualified from running a business for the first time.


The time has come for directors who do not play by the rules, to suffer the consequences. We recently wrote a piece about Phoenix Firms and their impact on the construction industry. Phoenix firms; where directors have deliberately dissolved a company to avoid its debts are a severe drain on the industry. Unfortunately, such bad behaviour is common across the business community.

The government is charging ahead with new plans to help small suppliers when companies go bust, including safeguarding workers and their pensions. As part of this scheme, bosses will face scrutiny and investigation if they escape paying a dissolved company’s debts. The threat of condemnation should prevent “phoenixing” and protect small suppliers from falling into financial distress.

This government scheme could prove to be a significant shake-up for the business community. The main focus of the scheme will be helping companies who are in danger of collapse, providing the tools to prevent a crisis. This will mean providing at-risk businesses with more time for restructure and new investment, and the opportunity to continue trading to ensure small suppliers get paid. Attention will also be made to improving a director’s work, improving training and inviting the Institute of Chartered Secretaries and Administrators to conduct talks and seminars.


Stuart Frith, President of insolvency and restructuring trade body R3, said: “Our members have long raised concerns that some directors are deliberately dissolving businesses to avoid paying their debts. A strengthened disqualification regime will be an important part of ensuring that directors are less likely to walk away from their responsibilities.”

These proposed reforms are a clear effort to maintain the UK as one of the best places to do business, an image that will be seriously under threat after Brexit. Rogue directors are a major cause of concern for British businesses, causing insolvencies and reaping unearnt rewards. At the Credit Protection Association, our credit monitoring services allow our Members to avoid reckless directors and proceed with business stronger.

CPA utilises credit reports, credit checks, a company and directorship register and County Court data, all to protect our Members from bad payers and directors of an even lower standard. Scrutinising both limited and unlimited companies, our disqualified directorship register provides our Members with the tools to identify and reject bad business practices.

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The Latest Insolvencies to 26 Sep 2018

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