The recent disqualification of a cleaning company director who transferred almost £200,000 from an insolvent company into a successor business serves as a reminder that there are no shortcuts when dealing with corporate distress.

The director received a seven-year ban after the Insolvency Service found that he had used the so-called Atherton scheme rather than placing his company into a formal insolvency process. The case highlights an increasingly important message for directors facing financial difficulties: attempts to avoid established insolvency procedures can expose directors to far greater risks than using them.

At Business Rescue Expert, we regularly advise directors who have been approached by organisations promising a “legal alternative to liquidation” or a way to walk away from company debts. Unfortunately, experience shows that such claims should be treated with extreme caution.

Business Failure Is Not Misconduct

Businesses fail every day for entirely legitimate reasons.

Rising costs, cash flow pressures, creditor action and HMRC arrears can affect even well-managed companies. Directors should not fear seeking advice when problems arise.

Formal insolvency procedures exist to provide directors with certainty and protection. What regulators are increasingly concerned about are arrangements which seek to bypass the safeguards built into the UK’s insolvency framework.

Why Formal Insolvency Procedures Exist

Many directors mistakenly view liquidation as something to fear.

In reality, recognised procedures such as Creditors’ Voluntary Liquidation (CVL), administration and Company Voluntary Arrangements (CVAs) provide:

  • Independent oversight.
  • Transparency.
  • Fair treatment of creditors.
  • Compliance with directors’ statutory duties.
  • Reduced risk of future challenges.

By appointing a licensed insolvency practitioner, directors demonstrate that they are acting responsibly and in accordance with their legal obligations.

Why Insolvency Avoidance Schemes Can Be Dangerous

Some organisations market themselves online as offering an alternative to using insolvency practitioners.

Typical promises include:

  • A legal alternative to liquidation.
  • No further responsibility for company debts.
  • A fresh start without consequences.
  • A cheaper and quicker solution.
  • Protection from creditors and investigations.

However, directors should recognise that these promises often provide no actual protection.

In fact, using such arrangements may increase the likelihood of future scrutiny by liquidators, the Insolvency Service and, in serious cases, criminal investigators.

What may appear to be a simple solution can leave directors facing years of uncertainty and regulatory proceedings.

Companies Promoting These Schemes Have Themselves Been Wound Up

One of the most striking features of these arrangements is that many of the companies promoting them do not survive long themselves.

Despite continuing to appear in Google searches and presenting themselves as alternatives to liquidation, a number have subsequently been wound up in the public interest.

Seven Companies Connected To The Atherton Scheme Were Shut Down

In September 2024, the High Court ordered the winding up of seven companies linked to the Atherton scheme after the Insolvency Service concluded that they had undermined the UK’s insolvency regime.

The companies were:

  • Atherton Corporate (UK) Limited
  • Atherton Corporate Rescue Limited
  • Atherton Commercial Limited
  • Atherton Secretarial Services Limited
  • Atherton Directors Limited
  • Atherton Group Limited
  • Atherton Business Services Limited

According to the Insolvency Service, the companies promoted themselves as a “legal alternative to using insolvency practitioners” and encouraged directors to transfer ownership of distressed companies rather than enter formal insolvency procedures.

Four More Associated Companies Were Closed In 2026

Regulatory action continued in February 2026 when the High Court ordered the winding up of four further companies associated with the scheme:

  • Atherton Corporate Partners LLP
  • Jones & Harlington Limited
  • TYA GRP Limited
  • TYA Two GRP Limited

Investigators found that more than £18 million of assets had passed through companies acquired under the arrangements.

The Companies May Disappear, But Directors Remain Exposed

One of the greatest dangers is that the businesses promoting these schemes may disappear within a few years, either through insolvency or by being wound up in the public interest.

The directors who relied upon them, however, remain vulnerable to:

  • Insolvency Service investigations.
  • Director disqualification proceedings.
  • Misfeasance claims.
  • Wrongful trading allegations.
  • Compensation Orders.
  • Criminal investigations in the most serious cases.

History increasingly shows that while the promoters may disappear, the directors who trusted them are often left dealing with the consequences years later.

Director Disqualifications Are Increasing

The authorities have not limited their attention to the promoters.

Several individuals connected with the wider Atherton arrangements have received lengthy disqualification orders. More recently, directors who used the schemes have themselves become the subject of investigations.

The latest case involved a cleaning company director who transferred almost £200,000 to a newly formed company instead of placing the business into a recognised insolvency procedure.

He received a seven-year disqualification.

The message from regulators is becoming increasingly clear: directors who use these schemes may face greater scrutiny, not less.

Compensation Orders Can Create Personal Liability

Many directors assume that disqualification is the worst possible outcome.

It is not.

Following a disqualification order, the Secretary of State can seek a Compensation Order requiring directors to make personal contributions towards creditor losses.

This means directors may face:

  • Lengthy periods of disqualification.
  • Significant personal financial liabilities.
  • Reputational damage.
  • Years of uncertainty and investigation.

What initially appeared to be an attractive alternative to liquidation can ultimately become far more expensive.

Why A Creditors’ Voluntary Liquidation Provides Greater Protection

A Creditors’ Voluntary Liquidation is a recognised legal process overseen by a licensed insolvency practitioner.

Far from being something directors should fear, a CVL provides:

  • Legal certainty.
  • Independent oversight.
  • Proper treatment of creditors.
  • Compliance with directors’ duties.
  • Reduced risk of future challenges.

Formal insolvency procedures exist to protect directors, creditors and employees alike.

At Business Rescue Expert, we regularly advise directors who have been promised an easy way out. Unfortunately, there is rarely such a thing as a risk-free shortcut.

Speak To Business Rescue Expert

Since 2005, Business Rescue Expert has advised more than 10,000 directors and undertaken more than 1,100 formal insolvency appointments.

Whether your company can be rescued or requires a Creditors’ Voluntary Liquidation, obtaining independent advice early can preserve options and minimise risks.

What directors should fear is not formal insolvency.

They should fear the false promise that there is an easier way.

Because when the companies promoting these schemes are eventually wound up, it is often the directors who trusted them who are left facing the consequences.

Frequently Asked Questions

Are insolvency avoidance schemes legal?

Many schemes operate in areas which attract increasing regulatory scrutiny. Directors should be cautious of any organisation promising that they can avoid liquidation altogether or walk away from debts without consequences.

Can I legally avoid liquidating my company?

Possibly. Rescue options such as Company Voluntary Arrangements, administration or refinancing may be available. However, where a company is insolvent and cannot be saved, a Creditors’ Voluntary Liquidation is usually the most appropriate route.

Can I walk away from company debts?

Limited companies provide protection because debts belong to the company. However, directors who act improperly may face disqualification, compensation orders or personal claims.

What is the Atherton scheme?

The Atherton scheme involved a group of companies which marketed themselves as a legal alternative to insolvency practitioners. Eleven associated companies have now been wound up in the public interest following Insolvency Service investigations, while criminal investigations remain ongoing.

Can directors be investigated years after a company closes?

Yes. Investigations by liquidators and the Insolvency Service can continue for several years after a company has entered liquidation or ceased trading.

What is a Compensation Order?

A Compensation Order allows the Secretary of State to require a disqualified director to personally compensate creditors for losses arising from misconduct.

Is a CVL safer than an informal arrangement?

A Creditors’ Voluntary Liquidation is a statutory procedure conducted by a licensed insolvency practitioner. It provides directors with transparency, certainty and significantly greater protection than informal or unregulated arrangements.