A cash collection company has been placed into administration with liabilities of more than £11 million, a report has revealed.
The Insolvency Service, who carried out an investigation into the firm, also discovered several instances of financial mismanagement.
The cash collection agency, Coin Co, reportedly fell behind with payments of collected funds to their clients from “at least March 2013” – a year before it was placed into administration in November 2014.
The investigation also found that the company owed four different customers some £5.8 million.
Robert Clarke, Investigations Group Leader at the Insolvency Service commented: “It is clear that companies handling money on behalf of others have a duty to ensure that funds collected are duly paid over to the rightful owners, under the agreements entered into. Directors who fail in these duties will be investigated and removed from the corporate arena for a lengthy period.
“Any individual who is registered as a director must make themselves aware of the duties such a position carries with it, and further that they are able and willing to carry out those duties and ensure that the business for which they hold responsibility is managed in compliance with its obligations under agreements entered into or they too may face disqualification in the event of failure.”
Ultimately, a court ruled that its directors caused or allowed the company to breach commercial agreements and allowed the company to fall behind on payments of collected funds. Each were given bans of eight years.
From our perspective, it is clear that this business venture quickly spiralled out of control after it fell behind on payments. Our advice to any business is to act fast. The sooner you seek professional advice, the smoother the outcome and the easier it is to avoid complex investigations.