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Insolvency fraud

What it is

When a company tries to do business while insolvent, such as applying for credit or trading while suspended or disqualified, or reforms as a phoenix company to avoid paying creditors.

Protect yourself

  • If a company that owes your business money becomes insolvent, do your research on the directors to spot any phoenix companies created in their name.
  • If you have a claim against a failed company, don’t give up on it, even if the phoenix company claims the failed company’s liabilities are not theirs.

Spot the signs

  • You’re owed funds from the insolvency of a company but nobody from the business is responding to your calls or paying off money they owe you.
  • Your business has given trade credit to a new business that has quickly gone under.

How it happens

Sometimes when a company goes bankrupt a second company is immediately started up with the same directors. This phoenix company may be set up to appear different from the failing company, but in reality continues to operate and trade in exactly the same way.

Creditors will usually only get a fraction of their money back when the original company becomes insolvent, but if the failed company’s assets are moved to the phoenix company there’s even less left for them to reclaim. Creditors are left out of pocket for the goods or services they supplied.

How to report it

If Fraud has been committed report it to Action Fraud and Financial Conduct Authority. For more advice and to raise any concerns, contact the Office of the Public Guardian.

If you suspect someone is in breach of a disqualification or bankruptcy order, report them to the Insolvency Service. It’s an offence to contravene a disqualification order or undertaking, a bankruptcy order, a bankruptcy restrictions order or undertaking. It’s also a criminal offence for another person to assist a disqualified person to act in this way.

Source - Action Fraud

Date Published: Jul 21, 2018

Types of fraud

A-Z of fraud

To help understand which fraud you've been affected by, we've categorised them into an alphabetical list.

What is fraud and cyber crime?

Fraud is when trickery is used to gain a dishonest advantage, which is often financial, over another person.

Advance fee fraud

Advance fee fraud is when fraudsters target victims to make advance or upfront payments for goods, services and/or financial gains that do not materialise.

Corporate fraud

Corporate fraud can be any fraud committed against a business.

Individual fraud

Individual fraud could be any fraud that targets a person directly. Individual frauds can differ from frauds affecting businesses and other organisations.

Online fraud

Some fraudsters rely on the internet to commit their crimes. Learn about some different types of internet frauds that and how to protect yourself and get safe online.

Identity fraud and identity theft

Identity theft is when your personal details are stolen and identity fraud is when those details are used to commit fraud.
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