New asset-stripping fraud on the increase

A new form of asset stripping fraud, growing in popularity, has been revealed
by Grant Thornton in a new report.

Disguising themselves as potential rescuers of an ailing business, these
fraudsters buy controlling stakes in the company, strip them of their assets and
leave creditors and shareholders with nothing, the mid-tier firm warned.

To combat this, company directors should check constantly a company’s listing
on the Companies House website to monitor any official change in the company’s
management or structure, the FT reported.

Grant Thornton said this type of fraud was rarely adequately pursued.

‘Once a company is stripped bare of its assets, there are no assets remaining
to allow an insolvency practitioner to investigate and pursue the fraudster,’
says Nick Wood, recovery and re-organisation partner at Grant Thornton.

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