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Y3S places life subsidiary into liquidation owing £191,000

  • 24/01/2012
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Cardiff-based packager Y3S Group has put its life insurance subsidiary BMB Financial Ltd into liquidation, owing more than £191,000, and blamed the firm's demise on the actions of its largest insurance provider and a minority creditor.

Of the 11 creditors, seven are insurance providers, owed almost £75,000, and all creditors are unlikely to regain their money, the appointed liquidator told Mortgage Solutions.

However, Y3S Group director Barney Drake strongly refuted any suggestion that Y3S had “phoenixed” its way out of paying creditors and said it was forced into the position of putting BMB into liquidation by a creditor.

A statement of affairs report filed with Companies House and dated 3 January showed that BMB had liabilities of £191,418.92. This includes £92,053.14 owed to HMRC and £19,020 to Cardiff City Council.

A total of £74,755.93 is owed to insurers, including: Fortis Insurance and Premium Credit – owed the most at £50,724.54 and £13,685.93 respectively – and Friends Life, Aegon, Prudential, Engage Mutual and Zurich UK Life Centre.

Drake explained that BMB’s troubles were a result of the action of its largest insurance provider.

He said: “Following the administration of [insurance intermediary] Click Life, our largest insurance provider wanted to ‘reduce its capital exposure’ and subsequently changed its commission parameters and capped our trade levels in early 2011, forcing immediate internal changes and the eventual demise of BMB.”

Drake said any accusation of “phoenixing” was “totally untrue”.

He said: “There is no phoenixing, as we no longer sell life insurance.

“BMB had payment terms agreed with the vast majority of its creditors, but the actions of a minority creditor forced the eventual position of liquidation, as it would not wait for all other creditors to agree.”

The appointed liquidator Sandra McAlister, of McAlister & Co, told Mortgage Solutions that it was likely creditors would have to write off the money they are owed.

She said: “The assets available to liquidate are considerably less than the liabilities and the cost of winding up the company will come ahead of creditors. However, it is a little early to say that there will definitely be no money for creditors. We will look into the company records and how it was run.”

At the time of liquidation, no staff were employed by BMB, after Y3S effectively shut the business in September last year, putting three of the 24 employees in consultation, with others leaving of their own accord or redeployed within the group, Drake said.

The Y3S Group currently employs 35 staff and Drake said that no other company within the group had been affected by BMB’s liquidation.

He said its subsdidiaries Y3S Loans, Y3S Debt Rescue and Y3S Bridging and Commercial are currently seeing “significant growth”.

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