False filings to Companies House ‘put appointments and charges at risk’

25 April 2024

IPs are being urged to check company information carefully upon appointment after hundreds of erroneous filings by an unknown individual to Companies House last month. 

In March, Companies House corrected 800 filings for 190 companies. The false filings incorrectly showed that loans had been fully repaid. It is believed that the 800 filings were made by just one person from an address in Northern Ireland.

Companies House did not publicly announce the errors or its corrective action but did communicate with bodies such as the Insolvency Service and the banking services trade association UK Finance to feed information to those affected. 

A Companies House spokesperson said: “We have taken steps to block the account that is linked with these transactions and, using new powers available to us, have removed all the related filings.

“We contacted the companies concerned and have launched an urgent review of our processes. We continue to work with law enforcement partners where appropriate.”

The registrar used new powers under the recent Economic Crime and Corporate Transparency Act 2023, which give it the ability to remove filings that are incorrect, document a transaction that has not taken place or one that has been provided without the company’s knowledge.

Matthew Davies, commercial finance director at UK Finance said: “It appears that those companies impacted were selected more or less at random.  There were a number of big businesses affected, including household names as well as some financial institutions, but also a number of small, real economy businesses.  Once identified, the situation was quickly put right, but initially some UK Finance members were affected as chargors and some were affected as chargees. 

“Companies House took swift action and provided reassurance that the charges had not been legally satisfied, but merely erroneously listed as so on the register. Nonetheless, it was a bit of a bullet dodge as had this happened weeks prior, the registrar would not have had its new powers to rapidly put the register right. 

“This has crystallised the already prominent issue of incorrect information making its way on to the register at Companies House. It is a further wake-up call for Companies House and those that rely upon it of the importance of greater efforts to ensure information is accurate and reliable.”

Law firm Squire Patton Boggs has warned about the dangers of such filings for restructuring and insolvency professional, and that information relating to the existence of qualifying floating charge holders is imperative when appointing administrators and may lead to an invalid appointment if a charge holder is not given notice as it should have been. 

It has also warned that if lenders have acted to reregister their security it could affect the priority of charges as well as risk new floating charge security under section 245 of the Insolvency Act 1986. 

Rachael Markham, professional support lawyer at Squire Patton Boggs, said:  “IPs and their advisors rely on the charges register at Companies House as being accurate – not least when it comes to the appointment of administrators, priority of charges, distributions, and potential challenges to security. The erroneous filings therefore did create concern.  Although the issue appears to have been addressed without significant consequence it reinforces the fact that it is always sensible to check with directors, lenders and shareholders that the filings at Companies House are correct.”

R3 started investigating the problem after it was alerted by Markham, a member of the General Technical Committee. Ben Luxford, R3’s head of technical, said: “We contacted the Insolvency Service, which has routes to communicate with Companies House. We had hoped that this would make the matter public and stop some of the rumours. We heard back from the Insolvency Service that Companies House had contacted those affected directly about what had happened and how Companies House was to rectify the  erroneous filings.”

Luxford said that the erroneous filings appear now to have been rectified but agreed that there could have been issues for insolvency appointments and floating charges had this not been the case. He added: “We would suggest that IPs be extra diligent and check with directors that the information on Companies House is correct and current in the course of their work.”

Organisations affected by the filings included banks such as NatWest and HSBC, as well as Sainsbury’s supermarket and estate agent Knight Frank. 

The Times reported that the incorrect filings had been made by just one man at the start of the year. He told the paper that he made the incorrect filings because he believed the companies owed him money. Although the paper did not identify the individual by name, it claimed the man is based in Northern Ireland and identifies as a Dudeist priest – a religion inspired by Jeff Bridges’ character, Jeff ‘the Dude’ Lebowski, from the Coen brothers’ crime-comedy film The Big Lebowski. The film focuses on ‘the Dude’, a laid-back bowling enthusiast who gets dragged into a kidnapping conspiracy as a result of mistaken identity. The religion promotes the tenets of ‘taking it easy’ and liberation from ‘thinking that’s too uptight’.