A controversial UK recruitment phoenixism case has emerged after a staffing business was acquired out of administration for the third time in four years, leaving millions of pounds owed to creditors including the UK tax authority.
The chain of insolvencies has raised fresh questions about phoenixism in the recruitment industry, a process in which companies collapse but reappear under a new corporate structure while former management continues to run the business.
Administrators revealed that two Hampshire-based firms, Sert Group and Sert Training, collapsed earlier this year before being purchased for £196,304 by a new company that required the existing management team to remain in place.
The repeated restructurings have left creditors facing losses of approximately £7.6m, including an estimated £4.5m owed to HM Revenue and Customs (HMRC).
Recruitment company collapses multiple times
The insolvency history of the Sert business group stretches back several years and involves multiple reorganisations.
According to administrator reports, Sert Group and Sert Training entered administration in January before being sold to an unrelated buyer called Meraki 6.
Despite the change in ownership, the new buyer reportedly insisted that key members of the previous management team stay in place as part of the acquisition agreement.
The management team included chief executive Mark Edwards and chief financial officer Ben Knight, who had also held leadership roles in previous versions of the same business.
Earlier insolvencies linked to same management
The current case follows two earlier insolvencies involving the same management figures.
In February 2022, Edwards and Knight were directors of a recruitment business called 3R Global.
That company entered administration before its assets were purchased by Sert Workforce Solutions for £60,000.
At the time of the acquisition, Edwards and Knight were also directors of Sert Workforce Solutions.
However, Sert Workforce Solutions itself entered administration in October 2024.
Its assets were then acquired by another entity, Sert Training, for £50,000 along with a share of future profits.
Sert Training had the same owner as the previous businesses and again retained Edwards and Knight in leadership roles.
Latest collapse leads to third sale
The most recent insolvency occurred after Sert Training traded for roughly 15 months before collapsing earlier this year.
Administrators then sold the company’s assets to Meraki 6.
The administrator’s report stated that two potential buyers had initially expressed interest in acquiring the business.
However, both offers depended on the existing management team remaining in their roles.
According to the report, management confirmed they would only work with one buyer, which led the other interested party to withdraw from negotiations.
Debate over phoenixism practices
Phoenixism is generally legal in the UK but has long been controversial because it allows businesses to shed debts through insolvency while continuing operations under a new company structure.
Critics argue the practice can disadvantage creditors and taxpayers if unpaid debts are written off.
HMRC estimates that phoenixism contributed to roughly 22% of the £3.8bn in tax losses reported during the 2022–2023 financial year.
The practice has drawn increasing scrutiny from regulators and policymakers as insolvencies have risen across several sectors.
New owner denies phoenix company allegations
Lawyers representing Meraki 6 said the latest acquisition should not be considered phoenixism.
They argued the new company had no direct connection with the previous owners of Sert and that there were no shared directors between the two organisations.
The firm said its purchase had preserved jobs and maintained business continuity.
Meraki 6 also stated that it was unaware of the previous insolvencies when negotiating the deal.
Management roles remain under scrutiny
Following the acquisition by Meraki 6, Mark Edwards initially remained listed as chief executive of the business and continued to be promoted as the main contact for job candidates.
However, Edwards has since been placed on gardening leave and is expected to leave the company.
Ben Knight, who served as chief financial officer, continues to work for the organisation according to staff members.
Meraki 6 said Knight is no longer a statutory director or shareholder of the company.
Neither Edwards nor Knight commented publicly on the earlier administrations linked to the business.
Recruitment sector faces growing scrutiny
The Sert case is not the only example of controversial insolvency practices within the staffing industry.
In recent months, several recruitment firms have collapsed while owing substantial sums to tax authorities and creditors.
Last month, Premier Group Recruitment entered administration with debts approaching £3m owed to HMRC and other creditors.
The company later resumed operations after being repurchased by its former owner for an initial £10,000.
The revived firm reportedly offered employees an incentive programme that included the possibility of an all-expenses-paid trip to Las Vegas.
Background: phoenixism and corporate regulation in the UK
Phoenix companies have long been a feature of the UK corporate landscape, particularly in sectors with high levels of temporary staffing and contracting.
Under insolvency law, directors are generally permitted to start a new business following a company’s collapse, provided they comply with legal requirements and do not breach director disqualification rules.
However, regulators and lawmakers have increasingly examined whether additional safeguards are needed to protect creditors, employees and the public purse.
The latest UK recruitment phoenixism case is likely to add momentum to calls for tighter oversight of insolvency practices in the recruitment industry.