Double Glazing Companies Come and Go.
Most people will have heard of companies getting into financial difficulties
and then disappearing one day to only reappear the next day – using
a slightly different name and employing the same people from the same
premises. These companies are sometimes referred to as Phoenix Companies.
What is a phoenix company?
A phoenix company is formed from the remnants of a failed company.
In many instances a phoenix company is preferable to a business disappearing
all together. Often the Phoenix will not take over any of the liabilities
of the failed company – such as guarantees – but in some
instances they will offer preferential terms or lower cost remedial work
to customers of the failed company.
Phoenix Double Glazing and home improvement
companies are not that unusual. Of course phoenix companies are
unpopular with consumers and for sure many people have suspicions of
of the directors of these companies. That said it should be realised
that having a “phoenix company” to deal with (and still obtain
spare parts etc) is preferable to the original business disappearing
Example: a double-glazing company may have to go into liquidation.
The owner of the phoenix company may buy the assets of the failed
company from the Receiver or Liquidator, at market price, and start trading
the same line of business immediately. Often the owner of the
new phoenix company was the main shareholder in the failed company also.
It has been suspected that some directors of companies have deliberately
run companies into the ground, and then bought the assets at a knockdown
price, from a "tame" liquidator, leaving the creditors with
However, the Insolvency Act 1986 tightened up on who can be
a Liquidator or Receiver, and also introduced a reporting regime
The Liquidator who does not fulfil his duties now risks
livelihood. The "serial director", in extreme cases, risks
his / her liberty.
As bad as the idea of Phoenix Companies appears it
should be realised that UK law covers these situations.
angry customers try to pursue failed companies and their directors – expecting
compensation. While we sympathise it should be realised that unless
there has been criminal action by the directors of the failed company
it is unwise to waste your time, energy and money trying to get compensation.
If however you have been dealing with a private individual (Sole
Trader) the situation may be different and it could be worth taking
court provided you are fairly confident they have the funds
to satisfy any judgement you may obtain. Mind you, if a sole trader
gets in to
financial difficulties, with little or no way of getting out
of these difficulties then they may ultimately declare themselves bankrupt.
It is for this reason that we recommend that you only buy from
who can offer you an insurance backed guarantee – a guarantee
that becomes effective should your original supplier go out of business.
Want to check out
who the directors and shareholders of a company are? Visit
Companies House - http://www.companieshouse.co.uk
Try their WebCheck
free company information and purchase company documents
Image Credits: Nuglas, Dial