Liverpool-based business lobbying and networking group Downtown in Business steps up campaign for a crackdown on serial ‘phoenix companies’. Tony McDonough reports

Downtown in Business (DIB) is calling on the Government to take tough action against serial ‘phoenix companies’ who it claims are exploiting current insolvency rules.

A phoenix company is a new business that rises from the ashes of a previously insolvent or liquidated entity. Often the same directors from the collapsed business start up the new one after paying to carry on using the name and assets.

This, says Downtown chief executive Frank McKenna, can leave suppliers, contractors, and taxpayers out of pocket.

DIB is a business lobbying and networking group, based in Liverpool and operating in a number of UK cities. Chairman and chief executive Frank McKenna has met with a cross-party group of parliamentarians to discuss growing concerns over the issue.

He told them current insolvency rules are being exploited by a minority of directors who repeatedly place companies into administration before re-emerging under new business structures.

These meetings form part of a wider campaign launched by DIB to secure reforms that better protect SMEs and ensure greater accountability for repeat offenders.

As part of the initiative, DIB has published an open letter to MPs, ministers, metro mayors, and civic leaders outlining a package of proposed reforms. The proposals include:

• Automatic investigations where directors are linked to multiple insolvencies within a defined period.
• Tougher director disqualification rules for repeat offenders.
• Greater transparency around pre-pack administrations and successor companies.
• Enhanced powers and resources for the Insolvency Service and HMRC to pursue serial abusers.
• Stronger protections for SME creditors during insolvency proceedings.
• A wider national conversation about fair business practice and responsible capitalism.

Frank McKenna said: “Every week, we hear from businesses that have done everything right. They have delivered contracts, paid their staff, honoured their obligations, and contributed to their local economy.

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“Yet when a customer goes bust, they are often left carrying losses that can run into tens or even hundreds of thousands of pounds. In some cases, they then watch the same directors start trading again under a different company name as if nothing has happened. That cannot be right.

“Let me be clear. This campaign is not about penalising genuine entrepreneurs whose businesses fail. Failure is sometimes an inevitable part of business. However, there must be a distinction between honest commercial failure and the repeated abuse of insolvency laws.”