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Does a director of CMC, Consumer Claims (UK) LLP pass the test?

In January 2020, Scott Sheedy was appointed as a director of Claims 2 Gain Ltd[1] – a company which currently has control over the claims management company, Consumer Claims (UK) LLP. The latter firm currently holds temporary permissions from the FCA and trades under several names which includes My Consumer Claims as shown below:

This is not the first time the Moneycheats project has written about Mr Sheedy as our blog in November 2018 asked Is this phoenixing? as it looked at Mr Sheedy’s other company, Hardwick Financial Solutions Ltd which was placed into administration in 2018. The CMC had traded under the name ‘Claims2gain’ but entered into administration in May 2018and subsequently surrendered their licence (CRM24618) with the Claims Management Regulator on 8th August 2018.

The business was subsequently put up for sale on 12th April and a “connected company Claims 2 Gain Ltd” expressed an interest in purchasing the business and assets via Consumer Claims (UK) LLP. An offer of £100k was subsequently accepted via an upfront payment of £25,000 and £12,500 paid monthly for the following 6 months. Directors at Claims 2 Gain Ltd at the time were Kylie Sheedy, Jamie Hubbard and David Sankey but the latter 2 have now left and been replaced by Scott and Grant Sheedy.

Hardwicks Statement of Affairs (which is signed off by Scott Sheedy) shows the CMC owed over £500k to HMRC but was owed £76, 485 by Scott Sheedy himself in respect of a loan account. The failed firm was also owed £17,116 from connected party, Mason Scott Insurance Ltd but the administrators were unable to recover it as they have been advised the firm is no longer trading. Presumably they were advised of this by current director Kylie Sheedy?!

The latest administrators update for Hardwick Financial Solutions Ltd, filed on 4th June 2020 also states a reconciliation of the directors loan account found items had been posted to the account by mistake reducing the amount owed by Mr Sheedy to £22,694 but this cannot be recovered until he has sold his residential property which is up for sale.

One could be forgiven for thinking Scott Sheedy has fallen on hard times however his Linked in profile which shows a liking of expensive cars and the purchase of a bespoke shirt made 8 months ago and costing £250 would suggest otherwise[2]

Scott, Kylie, and Grant Sheedy also run Here 4 Life Ltd which provides critical illness cover, mortgage protection and funeral plans and is listed on the FCA register as an AR for Be Insure Solutions Ltd.

However we are digressing from the fact that Scott Sheedy’s CMC was placed into administration owing more than half a million to HMRC but he is now back as a director of Claims 2 Gain Ltd, who in turn are the majority shareholder of the current CMC, Consumer Claims (UK) LLP- and who bought Hardwick Financial Solutions Ltd. Monies owed to Hardwick by connected parties, BernardScott Ltd and Mason Scott Insurances Ltd failed to materialise and there appear to be no record of a repayment to HMRC.

Phoenixing is defined as a process in which a company can quite literally “rise from the ashes”. An insolvent company’s assets are purchased by the company’s directors during administration. After closing the old company, they start a new business which continues to operate in exactly the same way using the purchased assets.

The result of phoenixing is that a business can resume trading as a new corporate entity with a completely clean slate, having been in administration.

Where phoenixing is deemed fraudulent is the situation where a director racks up debts, sells off the company assets to a newly formed company with the same directors, sold below market value as the company approaches insolvency, benefiting the directors and defrauding creditors.

The FCA are currently cracking down on this practice and are keeping a close eye on market behaviour. In April 2019, the Financial Services Regulatory Partners Phoenixing Group was set up by a number of regulatory bodies — including the FSCS, FCA and the Financial Ombudsman Service — to tackle the issue and are currently investigating 136 firms.

Is this a case for the regulator?

[1] [2]


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