ICSM Business News: concerns over the way collapsed logistics firm director denied access to assets to administrators - breaking the 1986 Insolvency Act

By Harry Mottram: It is a practice that has happened on many occasions and each time it is illegal but those responsible seem to get away from it. The practice of hiding assets, transferring of them, selling them – all before administrators move in to wind up an insolvent business or to try and find a buyer.

The latest case involves London based Cargo Worldwide (UK) Limited who have been reported on by Chris Tindall of Motor Transport – the trade publication for the logistics industry. He reported: “Administrators appointed to handle the affairs of haulage and freight forwarding firm Cargo Worldwide (UK) said the trading premises of the east London business had been cleared of all assets and company records upon their arrival. The company entered administration on 7 June after Genesis Asset Finance appointed KBL Advisory for non-payment under a hire purchase agreement.

“In a report to creditors, Richard Cole and Steve Kenny at KBL said company director Junaid Ahmed had failed to provide copies of the full versions of the financial statements or co-operate with their enquiries. The report said KBL could not rescue the firm, which held a licence authorising 10 HGVs and two trailers, as a going concern due to a lack of working capital.”

With a fleet of trucks and trailers and 31 staff the firm is essentially worthless after the assets were spirited away. ICSM’s Ian Carrotte said under the 1986 Insolvency Act it was illegal for anyone in the insolvent firm to hide or remove the defunct firm’s assets. He said: “On appointment, an administrator must take all the company's property into the administrator's custody or control.”

He said in this case that hadn’t happened. “Motor Transport’s Chris Tindall said that company director Junaid Ahmed had failed to provide copies of the full versions of the financial statements or co-operate with their enquiries,” he added, “apart from the secured creditors there was nothing left to sell in order to pay unsecured creditors. A very bad state of affairs including those for the administrators.”

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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk