Company Directors Abusing Insolvency System To Avoid Paying Creditors, Research Suggests

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Company directors are dodging measures designed to stop abuse of the insolvency system so that they can avoid paying their creditors, new research suggests, The Independent reported. Experts have expressed concern about the number of “phoenix” companies, which are created by directors after a firm is put into what’s known as a pre-pack administration. In a pre-pack, a company’s assets are sold before an administrator is appointed. The company can then legally start up again under a new name, but often the same directors, or people linked to them, buy up the assets, while creditors are left with unpaid invoices. Read more. (Subscription required.)