Wound-up tech company taken on by ex-boss
A COMPANY which had thousands of pounds of debts written off when it went into liquidation is back trading under the same name.
Directors at Trentham-based Internet Business Solutions called in liquidators on August 16 because of a downturn in business and the loss of key sales staff.
The website design and development firm owed £292,000 to employees and suppliers classed as unsecured creditors.
Former workers may be able to claim for unpaid wages, holiday pay and redundancy, but other unsecured creditors are unlikely to be paid.
And some of them are angry that director Neil Erlam has formed NetBiz, which is offering the same services from the same Bellringer Road premises and trading under the name Internet Business Solutions.
Mr Erlam and liquidators FRP Advisory point out that the original company had received deposits of more than £100,000 for jobs yet to be completed, and that stopping trading would have added this amount to the total owed.
And they say that £75,000 of the £292,000 is owed to Mr Erlam himself in the form of a director's loan.
But Juliet Wilder, technical director at Trentham-based Internet Service Provider and IT consultancy Hosting Systems, is angry at what she sees as the creation of a so-called "phoenix" company to continue trading after debts have been written off.
She said: "To be left with a £2,000 debt from a company that is still trading under the same name just doesn't seem like cricket to me.
"Phoenixing a company seems so very unfair. The creditors are left high and dry, with no recourse against a company that trades under the same name.
"While debts were being chased and they were making excuses why they couldn't pay that week, behind the scenes they were ensuring when they did bring in the liquidators, services could not be disrupted.
"I'm not sure how businesses can stand up in the local business community and state that their company is OK when they have caused financial issues to local firms, gone bump and just restarted the next day like nothing's happened."
Jonathan Allen, managing director of Shelton telephone services business Vesuvius, said: "Vesuvius is a small company and I rely on it for my personal income.
"I have a baby due any day and losing this amount of money simply is not an option for me. I am really not interested in which company has gone into liquidation and which one has been created, I just want the £1,100 they owe me."
NetBiz was formed on August 24 with Mr Erlam as director and it took over the firm in liquidation on September 7.
FRP said there had been no other interest in buying the business.
Chris Stirland, joint liquidator at FRP, said: "This represents a good result for the creditors as a whole, as the continuity of the business was secured and the deal ensures that customers who paid up-front for services will receive the products and services due to them."
Mr Erlam said it had been a difficult decision to place Internet Business Solutions in liquidation.
He added: "We have worked closely with the majority of creditors of the old company to minimise the impact as much as possible and where possible continued the working relationship.
"We would like to take the opportunity to thank those companies for their support during this delicate time.
"Our focus now is to ensure our customers receive the best quality product and service while providing secure and satisfying employment for our staff."
In the 12 months to the end of November last year, Internet Business Solutions brought in sales of more than £500,000, but earlier this year, the effects of the recession and the loss of key sales people took their toll.
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by Darren Moore, North Staffordshire
Tuesday, October 05 2010, 10:45PM
“Hmm ... surely not the same firm who featured in the Sentinel in November 09 trousering an enormous grant from Advantage West Midlands? The amount of taxpayers' money was 'undisclosed'. But, that kind of grant covered up to 35% of total planned investment. As the article mentioned investment of £1.2mn, the taxpayer may have given these cowboys £420,000 this year. Less than a year later, the liquidators' report shows the company had a "deficiency" of £405,000. Assuming this is correct, it's strange that a net £800,000 appears to have vanished in such a short time - all at the expense of staff, suppliers, and the taxpayer.
As I understand it, the terms of these grants require the money to be paid back if the project does not go to completion. Can't see any reference to that in the liquidators' report either.”
by Kevin Holdridge, Keele
Tuesday, October 05 2010, 10:39AM
“As a competitor of this firm and its 'predecessor', I can't say I'm surprised. This kind of approach brings the Internet industry into disrepute in my opinion. Unstable voume-based web development businesses driven by salespeople making questionable promises at silly prices leads to exactly this kind of situation, and makes it harder for reputable companies to operate.
My own company (www.kenthouse.com) prides itself on delivering value with honesty. Consequently, we are founded on relationship and results rather than sales churn-and-burn.”
by Kevin Holdridge, Keele
Tuesday, October 05 2010, 10:32AM
“Odd that the liquidation and sale happened so quickly. I know for sure that key local firms in the same industry weren't contacted with a view to making an offer - not sure how that fits with the administrators' duty to get the best deal for creditors. Smells bad.”
by M, Stoke
Wednesday, September 29 2010, 2:50PM
“By the look of things an example of yet another company burning their debt and simply carrying on regardless as if nothing had happened. It is a shame that a company that is supposed to be reputable cannot be honest to clients and customers about what is going on and in the end it is incredible that a Business Director is able to buy back his business and to continue trading after he has failed to pay people that dealt with his business in good faith and no doubt be left with nothing. I am amazed that the legal system allows this sort of thing to continue. Of course the Liquidators are bound to say that everything was legal, they would be a little foolish if they didnt! It is also my understanding that there were other parties interested in buying the business, this article says not???”
by Jonathan Allen, Staffordshire
Monday, September 27 2010, 7:29AM
“By "We have worked closely with the majority of creditors of the old company to minimise the impact as much as possible and where possible continued the working relationship", I think that he means "We have strung along the majority of creditors of the old company to minimise the impact to US as much as possible and where possible continued to use their services, knowing that we wouldn't be paying for them, for as long as possible, until alternative suppliers were in place". Vesuvius Communication Technologies was their fixed-line telephone provider and this was certainly our experience.”
by Jonathan Allen, Staffordshire
Monday, September 27 2010, 7:28AM
“By "We have worked closely with the majority of creditors of the old company to minimise the impact as much as possible and where possible continued the working relationship", I think that he means "We have strung along the majority of creditors of the old company to minimise the impact to US as much as possible and where possible continued to use their services, knowing that we wouldn't be paying for them, for as long as possible, until alternative suppliers were in place". Vesuvius Communication Technologies was their fixed-line telephone provider and this was certainly our experience.”
by Jonathan Allen, Staffordshire
Monday, September 27 2010, 7:22AM
“By "We have worked closely with the majority of creditors of the old company to minimise the impact as much as possible and where possible continued the working relationship", I think that he means "We have strung along the majority of creditors of the old company to minimise the impact to US as much as possible and where possible continued to use their services, knowing that we wouldn't be paying for them, for as long as possible, until alternative suppliers were in place". Vesuvius Communication Technologies was their fixed-line telephone provider and this was certainly our experience.”
by John Fisher, Stoke
Friday, September 24 2010, 8:58AM
“One of the many problems here, is that the law has not been adhered to. When a company goes into liquidation, they must display a notice on their website to such effect, in order to notify customers and potential new clients. This never happened, problem 1.
The ¿new¿ company is now also making posting news to their website which is plain and simple lying, in order to try and calm their current clients. Statements such as the following on restructure :
"As of 1 September 2010 the company became part of the NetBiz Group of companies. The objective of these changes is to provide a platform for continued growth and success of the Internet Business Solutions brand."
The notice should actually read, we went into liquidation to avoid paying creditors and have now reopened, cut our staff by 50%, and now don¿t owe our local creditors a penny. Other local companies may suffer serious hardship or even go under because of this!
1) How can they even be using the name Internet Business Solutions.. that was the business which went into liquidation.
2) How can they have done this for continued growth and success.. they have gotten rid of 50% of their staff.
The company doesn¿t even abide by the most simple of UK laws regarding websites, that it is a LEGAL REQUIREMENT to publish your limited company name on your website and include your company number, and place of incorporation. Maybe they don¿t want clients to know they are now ¿Netbiz Web Limited¿ with company number ¿07354368¿, formed on 24/08/2010, as it would raise questions why a) there had been a name change, and b) the company is a new company and not the old one with the name change applied!
I could go on, but the facts above speak for themselves. This company is not a good one to deal with, and any web company worth anything would know a little about the laws within the UK regarding what should legally appear on their site.. No notice of liquidation and no limited company details¿ a big no no! But as we know they do have something to hide.”
by Ian, Cheadle
Thursday, September 23 2010, 9:22PM
“Dodgy, Dodgy company. Would you really want to associate yourself with them? Problem is, they have basically committed a moral crime, because it is legal.
Do your self a favour, try a different design company - like www.online-digital.net”
by Lee Stoker, Burslem
Thursday, September 23 2010, 12:43PM
“Anyone left in the lurch should contact www.netinspire.co.uk - A local company with integrity. ;-)”