FPB concerned about phoenix firms
Mon, 16 Nov 2009
The government must intervene to address the issue of firms using corporate insolvency to escape their responsibilities to creditors, it has been claimed.
According to the Forum of Private Business (FPB), the problem of phoenix companies starting again under a different name is one that cannot be ignored, especially where small businesses are going unpaid.
The FPB explains that such a firm exists where the assets of one limited company facing liquidation are moved to another business, often with some or all of the original directors remaining in place.
Matt Goodman, the FPB's policy representative, said that when a business drops out of the market, banks and the government take their cut, but the small businesses which have supplied them are often left in the lurch with no payment or recourse.
"If a competitor wipes the slate clean of debts and carries on trading, where does that leave those small businesses struggling with their own finances?," he questioned.
"Though it may be too late to help those small businesses who have been hardest hit by phoenix practices in this recession, surely we can use this review to help isolate and correct the problem?"
The FPB has claimed that suppliers in Northern Ireland are the worst at paying their suppliers promptly.
Posted by Sarah Parish
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