West Midlands

Investigation Forces Closure of Medical Recruitment Advertiser

An advertising recruitment company has been wound-up by the High Court in Manchester following an investigation by the Companies Investigation Branch (CIB) of the Insolvency Service.

Professional Recruitment Direct Limited ("Professional"), based in Leamington Spa, carried on business as a publisher of a medical recruitment journal called Professional Recruitment Direct and latterly Midland Recruitment, which also advertised general recruitment vacancies. The company also operated two websites. Professional generated income from the sale of advertising space for recruitment advertisements to, amongst others, NHS Trusts throughout the UK, private hospitals, charities and HM Prison Service.

CIB's investigation found that the company operated almost exclusively by cold-calling employers, who had already placed recruitment advertisements in established and reputable third party publications. The investigation found that in many cases the employer believed they were being contacted by the reputable publication, rather than by Professional and, due to misleading sales techniques, that the employer did not understand that they were agreeing to a new order being placed in Professional's publications.

CIB found that over 50 complaints had been received by the NHS Counter Fraud and Security Management Service and Trading Standards offices, about Professional and its misleading trading activities over a period of 12 months.
The investigation found that of the total invoices raised, with a net value of £429,000, only 32% were subsequently paid, with many advertisers denying ever having placed an advert with Professional. Nevertheless, the company received over £208,000 into its bank account between May 2007 and February 2008.

In making the Winding Up Order the Court found, amongst other things, that:-

- The company operated with a lack of commercial probity. Its income and business being dependent on sales techniques which were improper, misleading and which, were designed to, and did, mislead potential customers in order to induce them to pay for advertisements.

- Potential advertisers were pressured into completing and returning Booking Confirmation Forms.

- The company provided false information to its bankers and Companies House.

- There was a lack of commercial benefit to advertisers, and the existence of the company's website was not externally advertised.

- The high level of unpaid sales invoices (around 68%) was indicative of a high level of advertiser dissatisfaction.

- The company failed to maintain or deliver up adequate accounting records.

- The company failed to file required documents at Companies House.

NOTES TO EDITORS

1. The registered office of Professional Recruitment Direct Limited was at 6A Augusta Place, Leamington Spa, CV32 5EL and the company traded from 16 Cross Street, Leamington Spa, CV32 4PX. The company was incorporated on 08 March 2007.

2. The petition to wind-up the company in the public interest was presented on 14 May 2008 under the provisions of s124A of the Insolvency Act 1986 following investigations carried out under section 447 of the Companies Act 1985 by the Companies Investigation Branch of the Insolvency Service. The Winding-up Order was made on 30 June 2008 following the appointment of The Official Receiver as provisional liquidator of the company on 21 May 2008.

3. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent.

4. The Insolvency Service carries out confidential enquiries on behalf of the Secretary of State for Business Enterprise and Regulatory Reform through Companies Investigation Branch. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.

5. All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit, PO Box 326, 17 - 21 Chorlton Street, Manchester, M60 3ZZ. Tele: 0161 934 4182
Email: piu.north@insolvency.gsi.gov.uk

6. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk
Insolvency Service, 21 Bloomsbury Street, London, WC1B 3QW

7. Media enquiries should be directed to: Lorna Dennis, Communications Manager, Insolvency Service, 21 Bloomsbury Street, London, WC1B 3QW.

Client ref Ins/Coms/16

COI ref 163803P