I expect that a few factoring insiders raised their eyebrows in September 2013 when Administrators were appointed to a supposedly successful fairly high profile factoring broker owned primarily by a husband and wife team plus one other with all three being directors.
Although it doesn’t affect the general public it doesn’t do the whole factoring industry any favours when companies that people turn to for financial advice end up going bust especially when one of it’s directors is banned from holding office for four years
I noticed at the time that shortly before the appointment of the Administrators a new company had been formed by two of the three directors of the existing company with just the wife not appearing to hold office but according to her LinkedIn profile she is employed as a researcher for them.
Operations were switched over to the new company so seamlessly that to the outside world it was just a change of name and it wasn’t until a further two years had passed that the full horror story unravelled by way of Administrators reports
It transpires that the factoring brokerage plus an associated company that went bust at the same time had racked up huge debts to HMRC of hundreds of thousands of pounds with one of the directors having an overdrawn directors loan claimed to be in excess of £400,000
Full details are available at Companies House here under Statement of administrator’s proposal 19th November 2013
The matter was treated seriously enough that one of the directors has now been disqualified as a director for four years as well as being made bankrupt. Full details of the disqualification and it’s underlying reasons are available from the disqualified directors database
Most factoring brokers don’t go bust in such a spectacular manner as they tend to modify their life styles in line with the success or otherwise of their broking and if they can’t make a success out of factoring they quietly shut up shop and do something else.
In this instance there is something not quite right as a debt to HMRC in excess of £400,000 is huge but that pales into insignificance compared to an overdrawn directors loan of £400,000 plus and it sticks in the craw that these people are still advising companies on financial matters with that sort of history behind them