MPs call for 'phoenix' directors laws
PUBLISHED: 09:54 06 March 2009 | UPDATED: 11:13 08 July 2010
New laws must be introduced to stop rogue company directors "rising from the ashes" of their failed businesses and simply moving to another enterprise, say Norfolk MPs.
New laws must be introduced to stop rogue company directors “rising from the ashes” of their failed businesses and simply moving to another enterprise, say Norfolk MPs.
The call, which has been backed by the Federation of Small Businesses, comes in the wake of the collapse of Lancashire-based firm Global Telecoms and Technology which left companies across Norfolk - including two in Watton, without phones, faxes or internet access.
As the Times reported last week, the Aerolite petrol station and garage in Norwich Road, Watton, and taxi firm Home James were left without phones, faxes and internet access after the collapse.
The problem has cost the businesses tens of thousands in lost revenue and many have yet to get their lines fully resolved.
Global was originally put in the hands of insolvency experts in early February. But soon after, a winding- up order was served on the company by its major creditor Gamma Telecom.
The order is due to be heard in court on March 19 and, if successful, it will see Global made insolvent.
Meanwhile, Global's owner, Mark Bedward, is now operating a similar telecoms business using another company he established more than a decade ago.
It is believed he is operating out of the same office in Bury, near Manchester, and representatives of the company, Universal Business Technology Ltd, have already contacted former Global customers asking if they want to be
reconnected by the new firm.
Mr Bedward is acting within the letter of the law but mid-Norfolk MP Keith Simpson said collective pressure now needed to be put on the government to introduce legislation to stop company directors “simply collapsing one company and starting up another whilst leaving debts and creditors”.
He said: “It does strike me that it is not beyond ministers to be able to come up with legislation to prevent this from happening.
“Okay, businesses can sometimes go bust through no fault of the management but you do sometimes suspect that people fold their company just in time to get out and start up another company.”
North Norfolk MP Norman Lamb said the government now needed to rethink its assumptions about how businesses were allowed to operate.
He said: “We cannot have people going around creating havoc in other people's companies and then just going off.
“We should not penalise good people, who have just been swept away by the torrent of the recession, from re-establishing their businesses. But is it right for a person to be able to walk away unscathed when hundreds of other businesses have suffered?”
A spokesman for the Federation of Small Businesses said it was time to put a stop to “phoenix directors who regularly rise from the ashes of their previous companies”.
Mr Bedward has been director of the company now called Universal Business Technology Ltd since it was established in 1998 under the name of First Step Technology Ltd.
The company has had various names and on February 20 this year it changed its name again to its present trading name.
A spokesman for the insolvency service said the UK already had a robust insolvency regime and the government had no plans to change the law.
She said: “A director of a company in administration, insolvent liquidation or administrative receivership can legally form a new company to carry on a business similar to, or even identical to, that of the former company providing he has not been disqualified from acting in the management of a limited company and is not personally bankrupt.”
The Times has so far been unable to contact Mr Bedward.
If anyone has concerns about the conduct of a director, they should contact the Insolvency Service's enforcement hotline at email@example.com.