A High Court ruling has found that Companies House was to blame after Cardiff-based engineering firm Taylor & Sons collapsed into administration.
A High Court judge ruled that a spelling error caused the 124-year-old Welsh family business to fail after it was wrongly recorded by Companies House as being wound up in 2009.
Companies House inserted a rogue ‘s’ and the actual company that had been wound up six years ago was based in Manchester called Taylor and Son.
The information was wrongly recorded on the companies register on 20 February and was corrected three days later on 23 February, however by the third day it was too late as word had already got around that the company was in trouble. The blunder led to the firm’s suppliers to cancel orders and banks to withdraw credit facilities.
The case was brought by the owner of Taylor & Sons, Philip Davison-Sebry, who is suing Companies House for £8.8m for false publication after at least 250 people lost their jobs.
Mr Justice Edis found Companies House owed a duty of care when entering a winding up order to take reasonable care to ensure that the order is not registered against the wrong company.
He added Taylor & Sons proved that the reason it went into liquidation was because of the Companies House error.
This is a preliminary judgement and the issue of damages will have to be resolved.
Companies House has said it is now considering the implications of the judgement.
Back in 2012 Jennifer Adams wrote an article for AccountingWEB on how important it is to be careful in naming a company.
On same names she advised: “If there are companies with the same name, which are not in the same group, it will not be possible to register the name, even with the consent of those in the group.
“If a company does get through the checks, another company (and only another company) could object under s67 CA 2006 on the grounds that the new name is too like an existing one,” she added.