Customer in liquidation + cold caller offering to buy the debt owed to us

cozzasmith

Hello.  I'm hoping someone can offer an insight into a rather unusual situation.  We are a small business (sole trader) and one of our customers (a Limited Company) has gone into liquidation, owing us circa £26,000 (inc VAT).  We have submitted our Proof of Debt form to the liquidators but aren't holding out much hope of seeing the money owed to us due to them having multiple bank loans and owing for PAYE etc as well as countless other creditors.

Out of the blue this week, we were called by a company called Commercial Credit Management (C.C.M) based in Wallsend.  They claim to have strong evidence that the Director of the company  traded wrongfully/fraudulently and therefore we could make a compensation order against the Director of the Ltd Co who owes us money.

Apparently they have evidence (though I don't know how they have obtained this) that the Director was fraudulently having money which was invoiced by the Ltd Co paid into a personal bank account rather than the Ltd Co account and that the Director has circa £1m in assets in a separate company.  CCM believe we/they would have a good chance of being paid out via the compensation order despite the company being in liquidation.

CCM have offered two options:

1.  We instruct him to proceed against the Director as above and the cost to us would be £1,000 + VAT.  If the Director makes us an offer and we accept it, the Director would pay us the agreed offer amount and in addition 20% extra to cover CCM's expenses.

2.  If we don't wish to pursue this route, CCM would buy the bad debt from us at 15% and then pursue the Director themselves, at their risk.

We have never heard of such a scenario before and our first thoughts were that it was a scam - the financial equivalent of an ambulance chaser - as we had been cold-called by CCM.  

Has anyone else come across such a scenario or can anyone advise whether this sounds legit or whether we are right to trust our gut instincts and ignore the communications from CCM?

Brie

So someone called you up out of the blue and suggest you pay them £1k+ to see if they can get your money back??

Ummmm....if they have evidence of fraud shouldn't they be giving that to the police and the liquidators instead of talking to you?

cozzasmith

That's exactly what we thought.  What I should have put in the email is that they seemed to have a lot of knowledge of the company who were in liquidation and their financial dealings but I'm guessing they could have just bought this information from somewhere.  

I appreciate your 'to the point' reply though as that was my initial reaction.  

With regards to your second point, I think it would probably be wise for us to contact the liquidators to pass on the alleged info.

Brie

My second thought was to wonder how they knew about your debt.  So maybe it's actually the company director or someone??  Potential bit of sleazy dealings??  Looked at the list of debts and thought "I know, I'll get cousin Bob to ring these people and off their a small percentage and that will make all the debts go away and I'll be scott free!!"

fatbelly

Companies do buy bad debts and 15% is a bit more than they would normally pay.

How much do you think you will get back from the liquidators?

cozzasmith

We’re pretty sure we won’t get anything as, looking at the creditor list sent to us from the liquidators, they owe a heck of a lot of money to organisations who will be far higher up the pecking order than us. 

I guess there is an element of FOMO with this also. If CCM are offering to buy the bad debt from us for 15% of its value, then surely they must be pretty confident they can get far more from the Company Director. 

When I Google the debt collection company (Commercial Credit Management), other than their own website, there is nothing online about them. 

We’re really torn as £26k is obviously a lot of money to lose in the first place so we’re dubious about whether CCM are genuine and can actually get us some money back. It’s a tough one. I know debt collection companies buy bad debts but is it common for them to buy bad debts owed by companies who are already in liquidation?

penners324

Everything screams SCAM to me.

justwhat

ico number is legit for the address that's on the ccm website. (there is a name on the ICO website)

But the CCM website sux's a bit.

Google does not bring up much for the phone number. And who is database for the website does not throw up much.

i cant find them on companies house. 

Khaderbhai

If the company is in official liquidation, it would be unusual that they would want to acquire that debt. Some red flags here as you and others have said. Companies House does have the company CCM dissolved in 2019 and links back to an accountant address, if you were even remotely tempted by there offer, I’d be asking for it in writing and asking them to confirm there company number etc. 

In my experience, best to write this the debt off as fully lost and if you get anything back from the liquidators (big IF), then that’s a bonus.

Annisele

cozzasmith said:

I guess there is an element of FOMO with this also. If CCM are offering to buy the bad debt from us for 15% of its value, then surely they must be pretty confident they can get far more from the Company Director.

If that was the only option they were offering, I'd agree with you. But it's possible the 15% offer isn't a real offer, and would disappear if you tried to accept it. If they hadn't made that offer and had just said "please pay us £1,000 and we'll recover the debt", I suspect you'd have been far less torn.