“Public Interest” Insolvency shuts down rogue magazine advertiser
04 December 2020
The Insolvency Service in England has published details of a case in which they acted under S124A of the Insolvency Act 1986 to wind up a rogue business, not on Insolvency grounds purely but rather on the grounds of Public Interest in protecting individuals and businesses from falling foul of hard sale and false advertising practises. Many businesses are all too aware of the promise of a one off or free advert in a publication, only to receive monthly invoices or worse, to notice much later that they have been paying out on DD mandates for months .
As reported by the Insolvency Service, Sage Media National Ltd was wound up in the public interest on 25 November 2020 in the High Court, Manchester, before Deputy District Judge Brown. The Official Receiver has been appointed as liquidator of the company.
The court heard that Sage Media National was a magazine publisher based in Liverpool and produced a magazine titled “Copperwheel”, purportedly on behalf of the West Midlands Police Motoring Club.
Trading from January 2018, Sage Media National pitched to businesses to advertise in the magazine. Concerns were raised, however, about the publishers before investigators from the Insolvency Service launched confidential enquiries into Sage Media National’s activities.
Investigators found that only four issues of the magazine, named “Copperwheel”, were published in more than two years of trading, with only 1,000 copies printed per issue and almost half of the adverts paid for had not been published in the magazine.
It was also discovered that to elicit further sales, the publishers claimed to prospective advertisers that more than 10,000 people across the UK and Europe read the magazine. The magazine, however, was only sent to around 50 members of the West Midlands Police Motoring Club, with the vast majority based in the West Midlands area.
Advertisers told investigators that the company used aggressive sales tactics and many were invoiced for adverts they had not agreed to. One charity, having agreed to a single advert, was invoiced for two further adverts they had not agreed to and the invoice was paid from a volunteer’s personal funds.
At the hearing, Deputy District Judge Brown heard that the company had failed to retain and produce company records and £88,000 was withdrawn by the company director and not accounted for.
You do have to wonder however whether the publications purported links to a police department brought this business to the top of the pile for “special attention” given the swiftness with which the authorities have acted in this one case. We can but hope that this might be the start of wider enforcement using these powers. Whilst we are based here in Belfast, local businesses report being plagued by such publications. This case illustrates another potential reporting route, through the Insolvency Service, in effort to bring the operations to heel.
For further information please contact the Insolvency and Restructuring team at Carson McDowell.
*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.