It has been reported that there is an increasing trend of fraudsters disguised as white knights are preying on companies in financial trouble.

They aim to buy controlling stakes in companies, strip them of their most valuable assets or run up a mountain of credit, then disappear with a tidy profit.

The scam rarely gets adequately pursued because once a company is stripped bare of its assets there are no assets remaining to allow an insolvency practitioner to investigate and pursue the fraudsters. The creditors are usually reluctant to fund insolvency practitioners in an investigation to avoid throwing good money after bad, leaving the Insolvency Service to deal with the matter.

It can be hard to catch up with the less-than-white knights, because they may hide their assets in offshore trusts, put them in the name of nominee companies and associates or transfer them to jurisdictions where it is very difficult to recover these funds.

Some key points to be aware of

• Directors who may have sold a business to fraudsters in good faith may also be at risk. If the original directors are not changed on the Companies House register, they would remain legally responsible for that company's conduct, and may be left to carry the can for the activities of fraudsters.
  
  
• Companies House have two services that can help. The Monitor service, which notifies companies by email of any documents filed in relation to that company; and the secure Web Filing service, which ensures an authentication code is used to make any changes to that companies' registered office and director listings.  By keeping a close eye on any statutory changes which go through Companies House, company directors can avoid fraudsters changing the identity of that company and engaging in a range of fraudulent activities such as opening credit accounts with suppliers and ordering goods that are not paid for; opening new bank accounts which can be used to launder money or obtaining loans.
  

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