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Manchester High Courts Close IVA Provider

The Courts close IVA provider Vanguard Insolvency Practitioners Limited. In addition, MDN Consultancy Limited, Newtco Limited and KIS Financial Consultancy Limited were also wound-up in the public interest on 12 May 2022 at the High Court in Manchester before His Honour Judge Hodge.

Petitions were submitted to the court by the Insolvency Service, on behalf the Secretary of State for Business, Energy and Industrial Strategy. The Official Receiver has been appointed liquidator of the companies.

The court heard that Vanguard was a ‘volume’ Individual Voluntary Arrangement (“IVA”) provider that enabled people in debt to come to an arrangement with their creditors to pay all or part of their debts.

Why Did Courts Close Volume IVA Provider?

Vanguard charged customers a fee for facilitating their arrangements, which were supervised by Vanguard’s licensed insolvency practitioner.

Following complaints about Vanguard’s practices, however, the Insolvency Service launched confidential enquiries before investigators uncovered serial abuse of the payments made by Vanguard’s customers.

Vanguard traded from 2016 and used third-party suppliers to help administer the IVAs and realise debtors’ assets. By April 2020 Vanguard had more than 14,000 IVA cases under its management.

Investigators found that between August 2018 and June 2020, Vanguard made payments to various third-party suppliers totalling almost £9 million from their customers’ estates under the guise of expenses or disbursements.

Connected Party Fee Sharing Arrangements

Some of the third parties under a fee sharing arrangement would then make payments to MDN Consultancy and KIS Financial Consultancy, who were connected to Vanguard through close personal or family relationships.

Further enquiries discovered that Vanguard’s licensed insolvency practitioner, responsible for overseeing the IVAs, did not properly explain to customers what their fees were being used for.

Investigators concluded that Vanguard’s practices lacked transparency as did the activities of its licensed insolvency practitioner.

The winding up proceedings were initially defended by Vanguard and the connected companies. But before trial, the four companies confirmed they would not oppose the proceedings without making any admissions. At trial the Court was content to wind up the companies.

The Judge commented that it was of particular concern that the director of Vanguard seemed incapable of seeing anything wrong in the company’s failure to disclose to creditors and debtors the mechanism that was used to pay money from the IVA estates, effectively for the benefit of himself and his companies.

Insolvency Service Comment: Courts Close IVA Provider

Claire Entwistle, Assistant Director of Investigation and Enforcement Services for the Insolvency Service, said:

Following a complex and lengthy investigation, the court recognised the severity of Vanguard and the connected companies’ activities before closing them down for good.

This sends a strong message to volume IVA providers that if they do not deal with their cases properly and there is evidence of abuse, we will take strong action to protect customers and stop them.

Are you a creditor looking to recover your money?

If you are a creditor of an insolvent company or a bankruptcy, Oliver Elliot can help you. We Know Insolvency Inside Out.

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Disclaimer: Courts Close IVA Provider

This page Courts Close IVA Provider is not legal advice and should not be relied upon as such. This article Courts Close IVA Provider is provided for information purposes only. You can contact us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.

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