Building Regs

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 the motivations 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 all together.

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 in the same line of business immediately. Often the owner of the new phoenix company was the main shareholder in the failed company also.

Special Note

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 nothing.

However, the Insolvency Act 1986 tightened up on who can be a Liquidator or Receiver, and also introduced a reporting regime on directors.

The Liquidator who does not fulfil his duties now risks his 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.

Sometimes 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 them to 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 companies who can offer you an insurance backed guarantee – a guarantee that becomes effective should your original supplier go out of business.

Extra Notes:

Want to check out who the directors and shareholders of a company are? Visit Companies House - http://www.companieshouse.co.uk

Try their WebCheck - Access free company information and purchase company documents online.

Image Credits: Nuglas, Dial a Conservatory