UK Recruitment Firm's Third Phoenix Rise Leaves Millions in Tax Unpaid
A UK recruitment business has been acquired out of administration for a third time in just four years, in a series of deals that have left millions of pounds owed to the public purse while allowing former management to remain in place. This pattern exemplifies phoenixism, a practice where companies are liquidated and directors restart with a new entity, often free of debts, which HM Revenue and Customs (HMRC) estimates costs the exchequer about 22% of the £3.8 billion in tax losses reported from 2022 to 2023.
The Sert Group's Chain of Insolvencies
In the latest case, an administrator's report details how two Hampshire-based recruitment companies, Sert Group and Sert Training, collapsed in January and were acquired for £196,304 by an unconnected buyer, Meraki 6, which insisted on retaining the previous management team. This management includes Sert chief executive Mark Edwards and chief financial officer Ben Knight, who had overseen two earlier iterations of the same business that also entered administration. Together, these three insolvencies appear to have left creditors £7.6 million out of pocket, with approximately £4.5 million owed to HMRC, according to research by business data firm Tech City Labs.
Historical Context and Previous Administrations
The saga began in February 2022, when Edwards and Knight were directors of a recruitment business called 3R Global. Its assets were acquired by Sert Workforce Solutions for £60,000 after it collapsed into administration. At the same time, the pair served as directors of Sert Workforce Solutions, which itself entered administration in October 2024. Its assets were then acquired by Sert Training for £50,000 and 7.5% of future profits. Sert Training, which had the same ownership and directors as the previous versions, lasted only 15 months before its administration and sale to Meraki 6.
Management Continuity and Legal Defenses
The administrator's report on Sert Training noted that there were two offers to buy the insolvent business, both contingent on the existing management staying in post. "Following these discussions, it was confirmed by [Sert] management that they would only work with the purchaser. Shortly thereafter, interested party 2 withdrew from the process," the administrator wrote. Lawyers for Meraki 6 argued that this purchase was not a case of phoenixism, as Meraki is not connected with the previous Sert owners and there are no common directors. They added that the deal saved jobs and their client was unaware of the business's prior insolvencies.
Ongoing Roles and Sector-Wide Implications
After the acquisition, Edwards continued to be listed as Sert's chief executive and was advertised as the main contact for job promotions, though Meraki stated he is now on gardening leave and departing. Knight remains with Sert, identified by a colleague as the chief financial officer, though Meraki claims he is no longer a statutory director or shareholder. Edwards and Knight declined to comment on the previous administrations. This case follows other instances in the staffing sector, such as Premier Group Recruitment, which went bust owing HMRC nearly £3 million last month, only to re-emerge under its former owner with promises of lavish staff trips.
Phoenixism, while often legal, raises significant concerns about corporate governance and tax accountability, with HMRC highlighting it as a major contributor to annual tax losses. The repeated insolvencies in the recruitment industry underscore the need for tighter regulations to protect public funds and ensure fair business practices.
