A recruitment executive – who was allowed to buy back the assets of his bust company in instalments despite it accumulating almost £3m of debt – has fallen behind on promised payments after pledging to send staff on an all-expenses paid trip to Las Vegas.
The development is the latest case to raise questions about the practice of “phoenixism”, accounting’s controversial art of liquidating companies to allow directors to rise from the ashes with a new entity, free of debts.
Premier Group Recruitment went into administration in September owing £2.9m, including £647,000 to HM Revenue and Customs (HMRC), which had begun enforcement proceedings against the company.
The recruiter’s assets were acquired three days later by a new company, PGGBR Ltd, founded by Andrew Woosnam, Premier’s 99% shareholder, who made an initial £10,000 payment and promised to transfer a further £600,000 via monthly £25,000 instalments over the following two years.
The restructured business initially appeared to be booming, with one of PGGBR’s early actions being a post on LinkedIn that announced: “END OF YEAR TRIP 2026. We’re going BIG … That means our consultants have the chance to hit their targets throughout the year and earn an ALL-EXPENSES-PAID trip to Viva Las Vegas.”
However, the new company now appears to have fallen behind on the agreed payment plan.
“The company faced a number of challenges on startup, with significant startup costs being incurred against the backdrop of turnover not reaching the anticipated levels,” the latest report to creditors by the administrators, Rob Keyes and David Taylor, of KRE Corporate Recovery, sets out.
“Given the above, there have been delays in honouring the terms and obligations of the contract, which has led to a reduction in the level of contributions that the company was due to make under the terms of the contract.”
The report goes on to state that Woosnam’s outstanding £1.2m director’s loan from the defunct Premier also remains unpaid, with the administrators previously estimating that they would recover about half that amount. He had also taken dividends out of the company totalling almost £2m since 2022.
Earlier in the administration, Keyes and Taylor, who were appointed by Premier, turned down a competing offer for the business by an unnamed second bidder for “an initial cash consideration of £321,000” as well as a “further royalty payment” – which is thought to have been potentially worth an extra £110,000.
While phoenixism is legal and can deliver better returns for creditors, because experienced directors are sometimes better placed to salvage a failed company, the practice has plenty of critics. HMRC has previously estimated that it costs the exchequer about 22% of the £3.8bn of tax losses reported in 2022 to 2023.
Louise Gracia, a professor of accounting at Warwick Business School, added: “Cases like Premier Group, where millions are extracted before insolvency, are much harder to justify morally, even if they are legal. It raises concerns around whether the law is drawing the line in the right place, allowing liabilities to be quietly shed while assets are retained, with the taxpayer quietly absorbing the difference.”
Despite passing on the opportunity of offering a quick return for creditors by selling the business to the other bidder, the administrators still appear confident their decision to back Woosnam will pay off in the longer term.
Their report added that they have “a fixed charge against the director’s matrimonial property, and we are satisfied that there is sufficient equity that exists whereby if we are forced to make demand and realise the consideration from the property then the full contractual sum will be recovered”.
They added that Woosnam “has now set up a monthly standing order payment” and that the new company is trading “on a break-even basis but more importantly its obligations to the crown and its creditors remain up to date”.
Neither Woosnam nor Keyes responded to invitations to comment.
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