A recruitment executive who was permitted to repurchase the assets of his insolvent company in installments, despite it accumulating nearly £3 million in debt, has defaulted on promised payments after pledging to send employees on an all-expenses-paid trip to Las Vegas.
Phoenixism Under Scrutiny
This development is the latest case to raise questions about 'phoenixism', the controversial accounting practice of liquidating companies to allow directors to rise from the ashes with a new entity free of debts. Premier Group Recruitment entered administration in September owing £2.9 million, including £647,000 to HM Revenue and Customs (HMRC), which had initiated enforcement proceedings against the company.
Asset Acquisition and Payment Plan
The recruiter's assets were acquired three days later by a new company, PGGBR Ltd, founded by Andrew Woosnam, Premier's 99% shareholder. Woosnam made an initial £10,000 payment and promised to transfer a further £600,000 via monthly £25,000 installments over the following two years. The restructured business initially appeared to be booming, with PGGBR posting on LinkedIn: 'END OF YEAR TRIP 2026. We're going BIG … That means our consultants have the chance to hit their targets throughout the year and earn an ALL-EXPENSES-PAID trip to Viva Las Vegas.'
Missed Payments and Challenges
However, the new company now appears to have fallen behind on the agreed payment plan. According to the latest report to creditors by administrators Rob Keyes and David Taylor of KRE Corporate Recovery, 'The company faced a number of challenges on startup, with significant startup costs being incurred against the backdrop of turnover not reaching the anticipated levels. Given the above, there have been delays in honouring the terms and obligations of the contract, which has led to a reduction in the level of contributions that the company was due to make under the terms of the contract.'
The report also states that Woosnam's outstanding £1.2 million director's loan from the defunct Premier remains unpaid, with administrators previously estimating they would recover about half that amount. Woosnam had also taken dividends totaling almost £2 million since 2022.
Competing Offer Rejected
Earlier in the administration, Keyes and Taylor turned down a competing offer for the business from an unnamed second bidder, which included 'an initial cash consideration of £321,000' as well as a 'further royalty payment' potentially worth an extra £110,000. While phoenixism is legal and can deliver better returns for creditors because experienced directors are sometimes better placed to salvage a failed company, the practice has many critics. HMRC has previously estimated that it costs the exchequer about 22% of the £3.8 billion in tax losses reported in 2022 to 2023.
Moral Concerns
Louise Gracia, a professor of accounting at Warwick Business School, commented: 'Cases like Premier Group, where millions are extracted before insolvency, are much harder to justify morally, even if they are legal. It raises concerns around whether the law is drawing the line in the right place, allowing liabilities to be quietly shed while assets are retained, with the taxpayer quietly absorbing the difference.'
Administrators' Confidence
Despite passing on the opportunity for a quick return for creditors by selling to the other bidder, the administrators remain confident their decision to back Woosnam will pay off in the longer term. Their report added that they have 'a fixed charge against the director's matrimonial property, and we are satisfied that there is sufficient equity that exists whereby if we are forced to make demand and realise the consideration from the property then the full contractual sum will be recovered.' They added that Woosnam 'has now set up a monthly standing order payment' and that the new company is trading 'on a break-even basis but more importantly its obligations to the crown and its creditors remain up to date.' Neither Woosnam nor Keyes responded to invitations to comment.
