Fraudulent phoenix activity and sham contracting are well-recognised issues in the context of protecting employees’ remuneration entitlements, both during the life of a company and after it has collapsed through insolvency. To date, much of the emphasis in dealing with these problems has been on the businesses’ controllers.
This paper takes a different approach and ponders whether at least some of these improper and illegal arrangements could have been devised and executed without some expert advice. It asks whether a more effective approach might be to target those advisers. Several cases have considered the liability of advisers as accessories to the company’s or directors’ breaches of legislation.
While these are useful starting points, the lack of other actions against advisers, coupled with a general failure of professional bodies to caution against these illegal and improper behaviours, undermines the continued effectiveness of these decisions. A concerted effort — by regulators, courts and professional bodies — is required to ensure that advisers are persuaded that advocating these sorts of fraudulent schemes is simply not worth the risk.