INSOLVENCY SERVICE
News Release (Ins/Coms/32) issued by COI News Distribution Service.
20 November 2008
Three companies
that offered a business network development service, which
targeted unemployed former middle and senior management
executives, have been wound up in the High Court following an
investigation by the Companies Investigation Branch
("CIB") of the Insolvency Service.
CIB's investigation found that BNG-UK Limited
("BNG"), aided by group companies BNG Associates Limited
("BNG Associates") and Business Network Group (UK)
Limited ("Business Network Group"), had promoted a
business network scheme. Members of the supposed network, mainly
small businesses, would benefit from preferential contract terms
when dealing with other network members and dealing with
'Associate' members of the network, such as accountants
and solicitors offering professional services. The CIB
investigation found no substantive evidence of the existence of
any such network.
The main purpose of the scheme was to recruit 'Area
Directors' to manage the network. BNG-UK targeted recruits
through placing advertisements on the JobCentre Plus website and
at nationwide JobCentre branches. Recruits were misled into
believing that they were being offered salaried posts with
salaries of up to £65,000. This was not the case in practice.
Recruits, in return for buying into the network scheme as Area
Directors were expected to generate income through their own newly
incorporated companies to attract in business network members and
to offer strategic advice and management services to members.
Area Directors were asked to pay a licence fee to join the
scheme, normally £18,000. The licence fee holder was said to be an
American based principal licensor, whose identity was not revealed
to any prospective and actual Area Director recruits. The licence
fee holder was actually one of the group companies, Business
Network Group.
The Area Director recruits were informed that they would not have
to fund the licence fee themselves as the fee would be mainly
funded by their newly incorporated company applying for a small
firm loan under the Small Firms Loan Guarantee Scheme
("SFLGS"). The SFLGS is a joint venture between the
Department of Business Enterprise and Regulatory Reform
("BERR") and participating lending banks. In the small
number of cases where recruits did join the scheme and obtained
loans for their companies via the SFLGS, all those companies have
failed to generate any income via the network scheme, leaving the
companies in potential default positions to the banks and the
Government. In some cases the loans have been personally
guaranteed by the recruits, who have found themselves once again
out of work and now having to personally service their company
loan repayments.
NOTES TO EDITORS
1. The registered office of Business Associates and Business
Network Group is at 3 Caldene Avenue, Mytholmroyd, Hebden Bridge,
West Yorkshire, HX7 5AF. The registered office of BNG-UK is at
Endeavour House, Coopers End Road, Stansted, Essex, CM24 1SJ.
2. The petitions against all three companies were presented on
12th August 2008 under s124A of the Insolvency Act 1986. The
companies were compulsorily wound up by the court on 12th November 2008.
3. The Insolvency Service carries out confidential enquiries on
behalf of the Secretary of State for BERR through Companies
Investigation Branch.
4. The Insolvency Service administers the insolvency regime
investigating all compulsory liquidations and individual
insolvencies (bankruptcies) through the Official Receiver to
establish why they became insolvent. The Service also authorises
and regulates the insolvency profession; deals with
disqualification of directors in corporate failures; assesses and
pays statutory entitlement to redundancy payments when an employer
cannot or will not pay employees; provides banking and investment
services for bankruptcy and liquidation estate funds; and advises
ministers and other government departments on insolvency law and practice.
5. All public enquiries concerning the affairs of the company
should be made to the Official Receiver at Public Interest Unit,
The Insolvency Service, 21 Bloomsbury Street, London WC1B 3SS.
Public Enquiries 0207 637 1110. Email: piu@insolvency.gsi.gov.uk
6. Further information about the work of The Insolvency Service
is available from: http://www.insolvency.gov.uk