The frequency of Public Interest Liquidation (PIL) petitions, which are advertised on the Insolvency Service (IS) website, is quite startling. The frequency goes some way, inter alia, to prove Professor Sir Otto Kahn-Freund QC (pictured) right in relation to the abuse of limited liability. His 1947 contention that the Salomon decision was 'calamitous' for creditors due to irresponsible use of the corporate form and limited liability is surely borne out by the frequency with which the IS have to deploy their powers under s.124A of the Insolvency Act 1986. Here are some examples from the IS, and these only relate to the last two months!
"21 January 2011 19:00
High Court orders boiler room “recovery” service to close
OTC Network Limited, an Oxford based company, that offered to help members of the public who had bought high risk or even worthless shares through so-called “boiler rooms”, has been ordered into liquidation on grounds of public interest following an investigation by Company Investigations, part of the Insolvency Service.
04 January 2011 11:29
Court action taken to shut down three companies involved in the sale of shares and bonds to the public
The Secretary of State for Business, Innovation & Skills has presented petitions in the High Court to wind up in the public interest Viking Mining Resources Limited, Viking Gold Limited and VGRM Limited.
21 December 2010 15:30
Umbrella tax companies taken out of service
Following an investigation by The Insolvency Service, two companies Sunday Solutions Limited and Bradbury & Co Limited, each involved in a tax umbrella scheme called the Sunday Solutions Scheme, for self employed consultants, have been ordered into liquidation in the High Court on grounds of public interest.
21 December 2010 15:00
High Court action to shut down two land banking companies
The Secretary of State for Business, Innovation & Skills has presented petitions in the High Court to wind up in the public interest two companies involved in marketing plots of land as an investment opportunity.
21 December 2010 14:00
Provisional Liquidator appointed to Virtual World Direct online e-lottery business
The Secretary of State for Business, Innovation & Skills has presented petitions in the High Court to wind up in the public interest Virtual World Direct Limited (www.virtualworlddirect.com), a British Virgin Islands registered company, and Information Technology Systems Ltd.
21 December 2010 10:00
38 Records Broken
A music production company, 38 Records Ltd, has been wound up in the High Court following an investigation by Company Investigations of The Insolvency Service.
17 December 2010 13:00
Company offering bogus mobile Phone cash back scheme is closed down
A mobile phone company offering ‘cash back’ incentives has been ordered into liquidation at the High Court. An investigation by The Insolvency Service found that MSols Limited, trading as “Mobile Rainbow”, made no proper provision to make the cash back payments it offered leading to over 1000 customer complaints.
16 December 2010 16:12
Commercially corrupt bankruptcy advice firm shut down by The Insolvency Service
A company that advertised itself as a ‘one stop shop’ for dealing with bankruptcy has been ordered into liquidation today following an investigation by The Insolvency Service
06 December 2010 17:00
Provisional liquidator appointed to Internet directory company
The Secretary of State for Business, Innovation and Skills has presented a petition in the High Court to wind up UK Business Internet Directory Ltd in the public interest.”
The learned professor is not the only one who can be seen to have been foresightful. As Professor Finch notes in her 2002 Insolvency Lawyer article on PIL (Insolv.L 2002, 5 (Aug), 157-165), the Cork Committee thought such petitions could be brought, "where banks concealed the true and highly speculative nature of their activities." The seminal report was published in 1982. Plus ça change plus c'est la même chose! Some commentators have argued that the IS do not bring about sufficient disqualifications of 'unfit' directors. This may be the case, but the IS, and specifically the Companies Investigation Branch (CIB), cannot however be charged with neglect on the PIL side of their investigation function as the above press releases show.
For Mr Justice Warren's recent judgment in Re Digital Satellite Warranty Cover Ltd & Ors [2011] EWHC 122 (Ch) (31 January 2011), which relates to FSMA led public interest winding up petitions, see here.
For Mr Justice Warren's recent judgment in Re Digital Satellite Warranty Cover Ltd & Ors [2011] EWHC 122 (Ch) (31 January 2011), which relates to FSMA led public interest winding up petitions, see here.
Picture Credit: http://farm3.static.flickr.com/2663/3925714753_0ba8e90a41_z.jpg?zz=1
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