Compulsory liquidation closes Legal Advisory Company

Legal Support and Assistance Limited, a Tunbridge Wells-based company that provided advice, often related to insolvency matters, has been wound up and ordered into compulsory liquidation by the High Court on public interest grounds.

The company has been wound up following an investigation by the Insolvency Service, which revealed that the firm was run by a Mr Gerard Hyde, a solicitor who was struck off the Roll of Solicitors on 9 December 2008 by the Solicitors Disciplinary Tribunal. However, Mr Hyde informed the investigators that most of the company’s clients were aware he had been struck-off the roll of solicitors.

Opaque and inadequate records

The Insolvency Service’s investigation failed to establish a firm understanding of the company’s dealings due to the lack of adequate accounting records, and specifically what each of the company’s transactions related to.

There were two transactions that caused the investigators particular problems, namely receipts of £326,514 and payments of £242,141, which were received from and made to seven clients. These receipts represented 75 percent of the company’s total income, and 56 percent of overall expenditure.

The court heard how most of the transactions related to entities that appeared to be connected with a Mr Kevin Sykes, who had previously been the subject of a bankruptcy order on 26 April 1993. His discharge from bankruptcy still remains suspended.

The court heard more details which gave it reason to believe payments made to and received from Mr Sykes might not be entirely above board. Mr Sykes had been the recipient of a director disqualification on 2 November 2005, which banned him from acting in the management or taking part in the formation of a limited company for 15 years. This disqualification was handed down following a conviction for fraudulent trading while operating as a ‘creditor resistance strategist’ under the business name ‘White Knight’.

Lack of commercial probity and transparency

The winding-up petition was presented in the High Court on 31 October 2014 under section 124A of the Insolvency Act 1986, following a confidential enquiry carried out by Company Investigations.

The grounds to force Legal Support and Assistance Limited into compulsory liquidation were its failure to maintain, preserve and/or deliver up adequate accounting records, lack of commercial probity and a lack of transparency.

Justifying his reasons for ordering the company into liquidation, Registrar Jones, said: “I am satisfied from the evidence I have referred to, without needing to deal with the other grounds relied upon by the winding-up petition, that this is a case where it is just and equitable to wind-up the company.

“A company providing legal services should not be operating in circumstances where it does not keep proper books and records and consistently does not do so.”

Welcoming the court’s decision, Chris Mayhew, Company Investigations supervisor, said: “The Insolvency Service will not allow companies to operate in this way and will investigate abuses and close down companies if they are found to be operating, as here, against the public interest.”

Legal Support and Assistance Limited was incorporated on 14 November 2011. Mr Paul Turner was recorded as the director of the company until 25 January 2012, at which point Mr Gerard Joseph Hyde replaced him in this role. The company was ordered into compulsory liquidation on 4 February 2015.

It is critical for any limited company to keep accurate records and for those offering insolvency advice greater care and example should be made. Every director is legally obliged to ensure proper records are maintained and annual returns entered at Companies House.

An insolvent company director must be aware of the perils of continuing to trade whilst insolvent and simply not having records is not acceptable as a means of protection as can be seen in this case.

If your company is insolvent and you are unsure what direction to take then you call us with confidence on 08000 746 757.

 

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