A furniture manufacturer has been refused an HGV operator’s licence over ‘classic Phoenix Syndrome’ concerns.
Mark Hinchliffe, Traffic Commissioners for Great Britian deputy traffic commissioner refused the application by Valiant Furniture (NW), saying several companies controlled by Valiant’s director Samuel Urmston had entered insolvency with significant debts. Successive companies, which previously held operator licences, accumulated deficiencies ranging from hundreds of thousands of pounds to almost £1m before new businesses were established and continued trading under similar names.
‘It is apparent to me that the controlling director intentionally or negligently took a number of business entities into insolvency, leaving behind large unpaid debts, and then almost immediately started (or continued) virtually identical businesses under slightly altered corporate names. In short, this is classic “Phoenix Syndrome”,’ he said.
After an inquiry, open to the public and which Urmston took part in, the deputy traffic commissioner said he did not believe Urmston’s claims for the reasons the companies failed, saying Urmston had ‘jumped on a couple of well-known and convenient bandwagons but these, in my judgement, do not come anywhere near explaining the massive debts owed to lots of different trade creditors, or the long-term and repeated failures, time after time, to pay PAYE deductions, NI contributions, and VAT to HMRC – as all Mr Urmston’s competitors, suppliers and customers will have had to do.’
Hinchliffe refused the restricted operator licence application made by Valiant Furniture (NW), which had sought authority to operate two vehicles.
The deputy traffic commissioner acknowledged that Urmston had not been disqualified from acting as a director, had not been the subject of any known relevant convictions and that there had been no recorded regulatory action against the previous operator licences. Urmston also appeared to have sufficient financial resources for a two-vehicle restricted licence.
However, he was not satisfied that the applicant was fit to hold an operator’s licence. He found that the pattern of repeated corporate failures could not be adequately explained by factors cited by Urmston, including the withdrawal of banking facilities, the Covid-19 pandemic and supplier issues.
‘To allow any company of which Urmston is now director to hold an operator’s licence (as its predecessors did) would, in my judgment, seriously blemish and undermine the good name of the commercial transport industry, the operator licence regulatory system, and the Traffic Commissioner’s gatekeeping role within it.’
In his written decision, Hinchliffe wrote:
‘Although it is natural to think that, in an application, the burden of proof lies on the applicant, there is still a natural justice expectation that, if the Traffic Commissioner has reason to question an applicant’s fitness, then those reasons – at least in broad terms – will be explained and the applicant given a chance to respond. In this case, the call-up letter and the public inquiry brief make clear that the principal reason for questioning fitness relates to Urmston’s corporate history including his trading, financial, and administrative activities as director of a number of limited companies, each of which – as an integral part of their ongoing business model – held a goods vehicle operator’s licence. This, in turn, meant that each of those limited companies was able to present itself to the outside world, and to actual and potential suppliers and customers, as having the Traffic Commissioner’s “seal of approval” in relation to its (and its director’s) past relevant activities – including activities as a director in carrying on a trade or business in the course of which goods vehicles were operated.
‘Whilst a limited company is a separate legal entity with a separate legal identity, most such companies do not manage or control themselves – and in this case, all the limited companies named below in bold were (or are) at all material times, controlled by Mr Urmston, as director. Thus, for the purposes of this decision the activities of the companies, and of Mr Urmston as director, are indistinguishable – they are one and the same. Each of the companies held an operator’s licence as an integral aspect of its business model. (In passing, I note that Mr Urmston’s first name initials are S J.)
‘S J Units Ltd was incorporated in 2003 and was dissolved in 2015. In this company (as in all the companies referred to) Urmston was either sole director, or a director along with his wife. In all cases, he was the controlling director. When S J Units went into liquidation there were very substantial unpaid debts and deficiencies. Inland Revenue, and Customs & Excise (as they then were) were together owed more than £100,000, and the outstanding figure for trade creditors was over £350,000. Even after any assets were realised, the total deficiency was around £440,000.
‘S J Units (Lancashire) Ltd was incorporated in 2013 and was dissolved in 2023. Here, the total deficiency was over £980,000 with HMRC owed well over £200,000, trade creditors and banks owed around £620,000 and employees owed £14,000. In relation to unpaid national insurance contributions, personal liability notices were issued against Mr and Mrs Urmston in the sum of around £125,000. This has not yet been paid, although Mr Urmston tells me that he has undertaken to pay it from the proceeds of sale of a property.
‘S J Units Northwest Ltd was incorporated in 2020. In 2021 it changed its corporate name to Valiant Furniture Ltd. It is currently going through a creditors’ voluntary liquidation, with winding up commenced in February 2026, when it stopped trading. The latest statement of affairs suggests that the expected HMRC debt will exceed £160,000, with trade creditors owed £320,000. Taking account of any assets, a total deficiency is expected of around £475,000.’
He concluded: ‘Given my impressions of the evidence, the substantial sums involved, the damage these unpaid debts must have done to a catalogue of other small businesses, the loss to public funds and, crucially, the thrice repeated process of incorporating a new company with a similar name, insolvency of the old company, liquidation, and then the continuation of the business without its accumulated debts under the replacement company, I find – on balance – that this is indeed an example of an abusive practice.
‘It is apparent to me that the controlling director intentionally or negligently took a number of business entities into insolvency, leaving behind large unpaid debts, and then almost immediately started (or continued) virtually identical businesses under slightly altered corporate names. In short, this is classic “Phoenix Syndrome” and it is something I can properly consider as relevant activities affecting fitness under the applicable provisions of the Goods Vehicles (Licensing of Operators) Act 1995.
‘I also bear in mind some positive features. Urmston is not disqualified from acting as a director. His companies have no recorded regulatory action against their previous operator’s licences. Urmston has not, so far as I know, been convicted of any relevant offences. He does not, he says, have any outstanding County Court judgments.
‘The applicant has sufficient financial resources for a two-vehicle restricted licence and does not appear to have operated its one vehicle in possession illegally. Indeed, some concerning ANPR evidence has now been explained by documentary evidence that Urmston did think to bring with him to the hearing.
‘But on the substantive issue, I am not satisfied that Urmston, as director, is not unfit to hold a restricted goods vehicle operator’s licence. I reach this conclusion on the basis of Urmston’s financial, trading and administrative activities in carrying on a trade or business (in the course of which goods vehicles were operated, under the authority of operator’s licences), through various limited companies that have, time and again, gone into liquidation with substantial financial deficiencies.
‘I have striven to objectively assess Mr Urmston’s evidence, and I do not accept that this repeated pattern was the result of a succession of unfortunate but unavoidable circumstances. The pattern I refer to is, to my mind, obvious and illuminating. But, more than that, stepping back and looking at the situation in the round, I consider that it has the indicative hallmarks of a strategy. To sell product, the businesses had to have an operator’s licence and, to that extent, join a regulated industry. And the likely cause and explanation for what has repeatedly occurred over the past 13 years means that to allow any company of which Urmston is now director to hold an operator’s licence (as its predecessors did) would, in my judgment, seriously blemish and undermine the good name of the commercial transport industry, the operator licence regulatory system, and the Traffic Commissioner’s gatekeeping role within it.
‘Avoiding the double negative, I find that the applicant, because of the past relevant business activities of its sole director, is not fit to hold a restricted operator’s licence. The application is therefore refused.’
