Bolton debt firms shut down following damning investigation

Bolton-based 3 Step Finance Ltd, (previously known as Global Debt Solutions Ltd), and 123 Finance Ltd have been wound up in the High Court following an investigation by the Insolvency Service.

The orders were made on June 1 following petitions presented on March 16.

The companies preyed on vulnerable members of the public by contacting them and offering to negotiate new plans with their creditors, in order to freeze interest and so reduce their debt.

In return for taking on the debt the companies took fees from the payments made to them.

3 Step Finance originally traded as Global Debt Solutions Ltd until they went into liquidation in early 2007. Its successor proved to be equally unsuccessful and ceased to trade in late 2009 – at which time it had insufficient assets to make payments to clients’ creditors as it was required to do.

Not long after, 123 Finance Ltd started to trade and 3 Step Finance Ltd went into voluntary liquidation on 25 November 2009, declaring that it owed more than £51,000 to clients. 

Though some clients were transferred to the successor company, investigators found that neither company took proper steps to monitor the payments to client creditors – and the incomplete accounting records mean that it’s impossible to ascertain just how much money has been lost.

One angry customer, who wished to remain anonymous, spoke of her ordeal at losing £4,000 to the company over the course of a year.

Posting on an online forum in January she wrote: “I dealt with these people when they were Global Debt Solutions. They then rang me in August to tell me they had gone into receivership and I would now be transferred to 123 Finance – I then found out they were in fact the same company.

“Over the year I paid them £4000 to pay off my debts but to date nothing has been paid and I still owe as much now as I did one year ago.

“This company is an absolute disgrace preying on people’s vulnerability. BE WARNED DO NOT TOUCH THIS COMPANY”.

Since the court case, ex-employees of 123 Finance have also come forward claiming the directors treated them little better than the customers. One man from Wigan, who wished to remain anonymous, claimed that both companies would regularly sack their employees after three months to avoid offering full contracts.

He said: “Sure enough, when my 3 months was up, they sacked me. But I‘m glad it happened; I was increasingly feeling the stress of ripping off customers who couldn't pay their debts.

“This company exploited the very people they advertised they were helping and I’m happy that they are no longer trading.”

The investigators discovered that after 3 Step Finance stopped trading, the directors declared dividends totalling £70,000 to themselves and took arrears of wages of £9,600 in order to reduce their own overdrawn loan accounts.   

In winding the companies up the Court found that 123 Finance had continued the failures of the earlier company and that, amongst other things, both had operated an unsustainable business model and had traded in a manner which was misleading and of little or no commercial benefit.

The Court also found there was a lack of transparency over ownership and control of the company as well as a failure to deliver adequate accounting books and to cooperate with the investigators. The court also noted an abuse of limited liability.

Chelsea Driver, of Bolton, worked at the 123 Finance for just one day before becoming disillusioned, she said: “This company has no morals, the staff are told to try and sell very expensive packages to customers who simply cannot afford them.

“I only did one day and every second phone call I answered was a customer complaining that 123 had not paid their money to their creditors.”