(Secretary of State for Business, Energy and Industrial Strategy v Vanguard Insolvency Practitioners Ltd)
This successful public interest winding-up petition, which was at first contested but then ultimately unopposed, was presented on the grounds that the respondent individual voluntary arrangement (IVA) providers (respondent companies) were carrying on their business in a way which lacked transparency and commercial probity, and which offended the spirit if not the letter of Statement of Insolvency Practice (SIP) 9. The respondent companies used various third party case management companies to conduct the IVAs and paid these third parties substantial fees for doing so. These fees made their way back to the respondent companies in the form of commission/revenue sharing. Neither debtors nor creditors were informed that the respondent companies would be benefiting from ‘secret commissions’. Accordingly, monies within the IVA were not applied in the interests of creditors/debtors, but for the benefit of those controlling the respondent companies.
This analysis was first published on Lexis®PSL on 7 July 2022.
Written by Alex Akin, associate at Keidan Harrison LLP.