Stockport debt firm leaves customers £7.2 million short-changed
A debt management and advice firm based in Stockport ceased trading in May, with the loss of 80 jobs and leaving a £7.2 million hole in its accounts.
First Step Finance Limited and its subsidiaries, Debt Help & Advice Limited and Primary Business Solutions Limited, ran out of funds and ceased trading on 20 May 2014 with the loss of all 80 staff. At the time of its collapse only a few thousand pounds remained in the company’s accounts, despite around 3,500 customers being in credit with the firm by around £7.2 million collectively.
On 28 May 2014, Paul Stanley and Jason Greenhalgh of Begbies Traynor were appointed joint administrators of the companies.
The business was sold on 19 June to Hobart Revenue Management Limited t/a Platinum Management, which took over debt management plans on behalf of the 3,500 customers. No transfer of client money was made to Platinum as part of the sale, but it is expected that there will be a 100% shortfall between the amount of funds paid in by the clients and the final cash position of the company.
Paul Stanley, Managing Partner at Begbies Traynor, said: “Unlike those debt management firms that set up a payment plan for clients to pay their creditors over a fixed period of time, the model First Step Finance took was to negotiate the total debt down before beginning payments for many of its customers. This meant that the company held a significant amount of its customers’ money at any time, most of which was missing when it ceased trading.”
The administrators are investigating the cause of the losses and establishing the current financial position, especially in relation to client balances.
Paul added: “While many customers believed that they were dealing with Debt Help & Advice, the majority were customers of First Step Finance, which had experienced trading problems some time earlier. Although customer funds should have been kept in a separate client account this was not the case, leaving a substantial hole on the firm’s ledger book and many customers still in debt to their original creditors.”
Platinum Management may be contacted on 0800 954 0401 or 0800 840 2860 (FREEPHONE)
Website : www.platinummanagement.co.uk/FSF.html
Paul qualified as a chartered accountant in 1987 with Arthur Andersen an international accounting practice. He worked on audits, management consultancy and buy out due diligence before specialising in insolvency and investigations. In 1990 he was granted an insolvency licence by ICAEW.
He worked on the Robert Maxwell private company administrations in the Middle East in the early nineties and developed strong banking relationships. In 1993 he joined up again with ex-Andersen's colleague Ric Traynor as Ric's first partner in the firm which later changed its name to Begbies Traynor. Paul acts as managing partner in the Manchester office and sits on both the firm's management and technical committees. He has a reputation as a straight-talking, honest advisor who is both technically strong and commercial.