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High Court Orders Closure Of Drugs Awareness Publisher

INSOLVENCY SERVICE News Release (Ins/Coms/03) issued by COI News Distribution Service on 8 April 2009

A London company that "cold called" businesses and used misleading sales practices to solicit business sponsorship of a children's drug, tobacco and alcohol awareness book called "Zack & Ella's Crazy Day" has been wound up in the High Court following an investigation by Companies Investigation Branch (CIB) of the Insolvency Service.

Customers were induced to place orders for multiple copies of the book for distribution to a local junior school of their choice by false statements made during unsolicited telephone calls from the company's self employed telesales team in Spain.

Persistent debt collection methods were then employed to enforce payment.

According to the director Mr Michael Beskine, a chartered accountant, the company sold around 150,000 copies of the book during 2005 and 2006, charging businesses here £150 for orders of 30 books and £249 for orders of 60 books (ignoring postage and packaging). He states that the company ceased actively trading in the summer of 2006.

The winding up action was initially opposed by the company. A three day hearing was accordingly fixed by the Court for the week commencing 30 March 2009. Shortly before the matter was due to be heard the company agreed grounds on which it would not oppose the winding up; Mr Beskine on behalf of the company agreeing with the main investigation findings that:

- the company's sales technique was intended to exert pressure on businesses to place orders,

- there was a lack of transparency in the company's affairs aggravated by a failure to properly reconcile the inter-company accounts and

- the failure to maintain and/or retain adequate books and records in this respect.

In ordering the company into liquidation Mrs Justice Proudman stated she was satisfied that it was in the public interest to do so as the evidence showed the company employed improper sales techniques due to a lack of internal controls and that it was unduly aggressive in chasing payment from small businesses, including in cases where there was no agreement. Proudman J further stated that there was a lack of transparency in the company's financial affairs in that it failed to keep documents and accounting records to verify its transactions. There was no verification of the various payments said to be due and owing or the underlying liability giving rise to those payments, and that the effect of this lack of proper documents and accounting records was that the entries in the company's accounts could not be tested.

Department for Business Minister Pat McFadden said: "We are determined to crack down on companies who cheat honest businesses and the action taken sends a clear message to would-be fraudsters that they won't get away with it".

Notes to Editors:

1. PY Communications Limited (trading as "Primary Years") was incorporated on 18 June 2004. The registered office of the company throughout has been at 67 Westow Street, London, SE19 3RW. The director and secretary from incorporation to 11 July 2006 is shown to be Ms Marilyn Lordes Bernadette Norville. Thereafter the sole recorded director of the company is shown to have been Mr Michael Donald Bernard Beskine with his wife Mrs Maria Beskin shown to have been secretary since 11 July 2006.

2. The trading addresses in Spain (where around 30 self employed telesales staff were engaged) were Avda de la Constitution, No 32, Office 17, Arroya De la Miel, Malaga and The Marbella Business Centre, Avda de Las Cumbres, Marbella, Malaga.

3. In the period to 30 June 2006 the company made payments to and received payments or the benefit of payments from other companies associated with Mr Beskine. None of the payments identified by the investigation totalling some £300,000 are verifiable by reference to any written agreements, invoices or other documentation.

4. On 19 January 2009 the company filed accounts for the year ended 30 June 2007 showing a balance sheet deficit of £119,704.

5. The petition to wind up the company in the public interest was presented on 28 February 2008 under the provisions of section 124A of the Insolvency Act 1986 following confidential enquiries carried out by Companies Investigation Branch (CIB) under the provisions of section 447 of the Companies Act 1985, as amended. The action taken was initially opposed by the company.

6. On 6 April 2009 the company was ordered into liquidation; the above grounds on which the company no longer opposed the public interest winding up having been agreed with the company.

7. Companies Investigation Branch, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Enterprise & Regulatory Reform (BERR).

8. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.

9. All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit, 21 Bloomsbury Street, London, WC1B 3SS, Tel No: 020 7637 1110. Email: piu.or@insolvency.gsi.gov.uk

10. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk

11. Media enquiries should be directed to: Lorna Dennis, Communications Manager, Insolvency Service, 21 Bloomsbury Street, London, WC1B 3QW. Telephone: 020 7637 6279