A ‘business recovery’ firm has been wound up in the High Court after an Insolvency Service investigation found it had been preying on clients.
LCG-London Capital Group Limited (LCG) contacted struggling companies with the aim to convince it could provide a buyer for them via a share sale agreement in exchange for a fee. Companies with upcoming winding up petition hearings were ‘cold-called’ by LCG and were offered a way to keep the business going, or so they thought.
The investigation found companies involved were all put into compulsory liquidation soon after signing up with LCG and the new buyer failed to account for assets and records and did not cooperate with the Official Receiver.
They had also made false assurances to clients that there would be no investigation of the directors and company if it entered insolvency proceedings. It is an insolvency practitioner’s duty to investigate if a company goes into administration or liquidation on behalf of creditors.
Directors must be vigilant when receiving cold calls from recovery firms and should always research insolvency practitioners and restructuring firms to ensure they are reputable before proceeding.