Fed up by the practices of so-called ‘phoenix’ firms – which rise from the ashes of insolvency with the same personnel, a different name and a number of unpaid creditors – printers have leapt into action.
Backed by various trade organisations, including the British Printing Industries Federation, the sector is trying to pool efforts to ensure that serial phoenix offenders are not awarded contracts while creditors go unpaid.
If a ‘phoenix’ company approaches a member business, it is advising its members to report the company to the insolvency service.
In effect, the BPIF, which represents around 60% of the printing industry in terms of turnover, is attempting to rid the industry of phoenix companies
‘It’s the one sector where the infantry is fighting back,’ said Nick Hood, senior London partner at corporate recovery experts, Begbies Traynor.
The BPIF’s ire is aimed at ‘phoney phoenixes’ – those companies that do not go out of businesses for reasons such as, say, falling trade or rising pensions, but instead use insolvency as a tool to nail down costs.
‘There are insolvency practitioners around who know how to do this and encourage it. Some phoenixes were happening four or five times in a row,’ said Cicely Brown of the BPIF.
Andy Allies, of ICSM credit, insolvency experts for the print sector, estimates that less than 5% of industry turnover, is hit by insolvency.
Nick Hood believes the lead taken by the printers could easily be repeated in other industries. ‘In other sectors where it could happen, they just have not got their act together,’ he said.
He said it was an ‘admirable’ stance. Nevertheless, he thought it would have repercussions for insolvency practitioners, especially when finding a buyer for a company that has gone into insolvency.
‘If the management approach me and want to buy the business, when they do their homework you tend to find they go away.’
He said that a distinction needed to be drawn between ‘good and bad’ phoenixes. ‘I understand the need to clamp down on it, but there needs to be an understanding that there are phoenixes and there are phoenixes,’ he said.
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