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