Decision for Valiant Furniture (NW) Ltd
Written decision of the Deputy Traffic Commissioner in the North West for Valiant Furniture (NW) Ltd
NORTH WEST TRAFFIC AREA
VALIANT FURNITURE (NW) LTD (Applicant)
BEFORE: MR M HINCHLIFFE (DTC)
SITTING AT HAYDOCK ON 14 JULY 2026
DECISION
The application is refused.
This decision is made having regard to and applying Ss.13B and 8(4), along with Paras 1(e) and 3 of Schedule 2 of the Goods Vehicles (Licensing of Operators) Act 1995.
REASONS
Valiant Furniture (NW) Ltd (“the applicant”) has applied for a restricted goods vehicle operator’s licence authorising the use of two vehicles. The sole director of the applicant company is Mr S J Urmston.
The distinction between an applicant and an existing operator is important. In Muck It Ltd and Others v Secretary of State for Transport (2005) EWCA Civ 1124 the Court of Appeal considered the effect of Council Directive 92/26/EC (as amended). Rix LJ noted:
“Article 6.1 clearly relates to applications and Article 6.2 clearly relates to revocations. Article 6.1 is neutral as to where the burden of proof lies, but of course in the case of applications it is natural to think that it lies on the applicant.”
In Aspey Trucks Ltd [2010] UKUT 367 (AAC) the Upper Tribunal said:
“The Deputy Traffic Commissioner was not looking at putting someone out of business. Rather, he was deciding whether or not to give his official seal of approval … In this respect, Traffic Commissioners are the gatekeepers to the industry - and the public, other operators, and customers and competitors alike, all expect that those permitted to join the industry will not blemish or undermine its good name.
In this case, applying sections 13B and 8(4), along with paragraphs 1(e) and 3 of Schedule 2 of the Goods Vehicles (Licensing of Operators) Act 1995, I have to be satisfied, on balance, that the applicant is not unfit to hold an operator’s licence by reason of (amongst other things) any “relevant activities” – a phrase that means any of the following—
- activities in carrying on any trade or business in the course of which vehicles of any description are operated;
- activities as a person employed for the purposes of any such trade or business; or
- activities as a director of a company carrying on any such trade or business.
The word “activities” has a wide scope. I take it to mean a thing or things that a person or company does or has done – as in, for example, “the firm’s trading, financial, administrative or marketing activities”
In Redsky Wholesalers Ltd [2013] UKUT 0194 (AAC) the Upper Tribunal held that that fitness is not a significantly lower hurdle than the requirement to be of good repute.
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 Mr 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) Mr Urmston was either sole director, or a director along with his wife. In all cases, he was the controlling director. When S J Units Ltd 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 & 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.
When S J Units Northwest Ltd applied for its operator’s licence the previous liquidation of S J Units Ltd was disclosed and explained thus:
- “The directors had shares in S J Units which closed down in 2013. This was due to Natwest bank withdrawing their overdraft and the company being owed money from a Romanian company that closed down.”
Valiant Furniture (NW) Ltd was incorporated in January 2026 and, in February 2026, it made the application for a restricted licence that is now before me. On this application, Mr Urmston’s previous financial history was set out as follows:
“S J units went into voluntary administration in 2021 due to covid forcing us to close down. We were not entitled to support by government as they said we fell between the cracks.”
At the public inquiry, Mr Urmston attended and was not represented. He explained that the applicant company manufactures bedroom furniture which it delivers to its main customers who, in turn, then sell on the furniture to a range of generally smaller corporate customers. The applicant does sell some product direct to the retail sector, but this is a smaller part of the business. Currently, unless and until the applicant is granted an operator’s licence, the applicant delivers product to its customers by using vehicles up to 3.5 tonnes (which do not need an operator’s licence) or, if large goods vehicles are needed, by using the transport services of a local haulage operator.
Mr Urmston did not challenge any of the figures summarised above although he suggested that some of the unpaid suppliers had agreed to supply the successor companies by overcharging for materials - and so, in this way, their losses were mitigated. He also stressed that, with regard to monies owed to HMRC under the personal liability notices (which Mr Urmston felt were somewhat unfair), he would find and pay the required unpaid national insurance contributions from the proceeds of sale of a property that was currently on the market.
Mr Urmston maintained that the reasons for the previous company failures were outside his control. S J Units Ltd had gone under due to the withdrawal of credit facilities by the NatWest bank, and default by a Romanian customer; S J Units (Lancashire) Ltd suffered because of the Covid pandemic; and S J Units Northwest Ltd (a.k.a. Valiant Furniture Ltd) became insolvent when a supplier would not or could not continue to supply. Although Mr Urmston seemed to have anticipated each company’s demise well in advance - and set up new companies with very similar names to take over and continue the business before the previous company finally went into liquidation - he denied any deliberate strategy. He simply saw the writing on the wall, he says, and took the appropriate steps to protect himself and his business for when the time came for the insolvent companies to finally close down.
The Traffic Commissioner had raised a concern about the apparent use of company names that were strikingly similar to the names of predecessor companies. Under Section 216 of the Insolvency Act 1986, a new company can only use a name identical or very similar to an insolvent liquidated company if it meets one of three strict statutory exceptions. Unless at least one of these exceptions applies, anyone who was a director or shadow director of the failed company in the 12 months before its liquidation is banned from using that prohibited similar name for five years.
The rule was specifically introduced to tackle “Phoenix Syndrome”. This is an abusive practice whereby directors intentionally or negligently take a company into insolvency, leave behind large unpaid debts, and almost immediately continue the business under a slightly altered name. Typically, the new company will retain or acquire the assets of the failed company, sometimes at undervalue and, with the name, assets and goodwill back in play, can exploit the goodwill and business opportunities of the original company. Creditors of the old company are left with limited recovery while the new company effectively conceals the previous failure.
I mentioned to Mr Urmston that I had looked at the applicant’s website – the address is simply ‘valiantfurniture.co.uk’, the logo of the company remains “Valiant Furniture” and the Registered Company Number is given as 12619697, which is the number for Valiant Furniture Ltd, and not the number for Valiant Furniture (NW) Ltd. Mr Urmston told me that this was an oversight.
The Section 216 ban exists to protect creditors and the public, and prevents the public, customers and suppliers from being misled into thinking that they are still dealing with the previous entity. It stops directors from exploiting the built-up goodwill of the brand while walking away from their financial obligations, and aims to promote fair competition by, for example, preventing failed companies from gaining an unfair advantage over legitimate competitors that pay their bills, taxes, and suppliers.
One of the exceptions to the rule arises where the new company purchases the business from the liquidator. The new company must buy all or substantially all of the failed business directly from the licensed insolvency practitioner, and the director must give formal notice to all creditors of the old company and publish this notice in The London Gazette within 28 days of the acquisition. The statement of affairs for Valiant Furniture Ltd does not specifically mention any sale of the company business, goodwill or assets to the applicant, and the total assets of the company available to preferential creditors - including goodwill and cash - is shown as only £7,700.
At my request, Mr Urmston spoke with the former liquidators of Valiant Furniture Ltd, and, as a result, the Traffic Commissioner’s office received an email from the former liquidator stating:
- “The director of the Company advertised notice in the London Gazette that they intended to reuse the Company name in their new company. I further understand that the director notified all creditors of the intention to reuse the Company. Accordingly, I am not aware that there has been any breach of section 216 of the Insolvency Act 1986”
In the circumstances, I decided not to delve further into the issue of whether or not the applicant formally bought the Valiant Furniture Ltd business directly from the licensed insolvency practitioner and, if so, for how much. There is no evidence of this in the financial paperwork, and it is not directly referred to in the liquidator’s email.
However, I do not have the specialist knowledge, function or authority to enforce company or insolvency law – indeed, as I explained to Mr Urmston, the public inquiry is concerned only with the narrow issue of whether or not to grant a two-vehicle restricted goods vehicle operator’s licence. The applicant was not granted an interim licence, and the continuation of the business has apparently managed without an operator’s licence since Valiant Furniture Ltd ceased operations in February 2026 so, apart from taking a view on the question of possible “Phoenix Syndrome”, which would be a relevant activity, I will leave corporate and insolvency law to others.
I therefore turn to the substantive issue before me. The information I have as to the applicant’s trading, financial and administrative activities in carrying on a trade or business in the course of which goods vehicles were operated (and, by corollary, Mr Urmston’s relevant activities) is necessarily focussed on the bald and undisputed facts, dates, and the bottom-line financial numbers. From these it may be possible, within reasonable limits, to draw relevant inferences concerning the activities that led to these repeated corporate failures and consequent deficiencies and unpaid debts.
But I approach the matter with caution and remind myself that even this cumulative picture does not mean that the application necessarily has to be refused. I must hear what Mr Urmston has to say and make decisions as to such matters as the credibility, context, consistency, corroboration and comprehensiveness of the evidence – all informed by my impressions of Mr Urmston, having had an opportunity of watching him and hearing what he had to say. As I explained to Mr Urmston, that is a key purpose of a public inquiry and, whilst retaining a completely open mind, I tried to put to him what a rational and reasonably informed person might make of the evidence.
Without being overly forensic about it, I was not persuaded that Mr Urmston’s involvement in three similar company liquidations - with the business (but not the debts) moving relatively seamlessly to pre-incorporated successor companies - can be satisfactorily explained and discounted on the basis of the reasons offered.
It is common knowledge that, for a period of four or five years commencing in 2008, NatWest and its parent group (then operating as RBS) were said to have mistreated some small businesses. The practice was publicly exposed. But Mr Urmston’s evidence – uncorroborated by any documentation or mention in the liquidation documents in the public domain – is vague and unconvincing. Nor do I see how a company supplying a domestic market for bedroom furniture could be owed such an amount by a Romanian company as to lead to the collapse of S J Units Ltd in 2015.
Similarly, everyone knows about the Covid pandemic, about the government’s various loan and financial relief and furlough schemes, and the difficulties of business at that time – especially in the area of hospitality and leisure. But most businesses not directly floored by the pandemic found a way to work within the confines of social distancing, especially those without a public-facing component, such as commercial transport and manufacturing. Again, Mr Urmston was vague and there is no corroboration. I am also unpersuaded by the explanation given for the recent demise of Valiant Furniture Ltd. No supplier in this field is likely to have a total monopoly.
In my view, Mr Urmston has 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.
I am not impressed with the idea that the applicant is now paying over the odds to previous trade creditors from the previous companies as a sort of tax-deductible back-door way of paying what, legally, is a cancelled debt. Paying significantly inflated prices to suppliers is almost calculated to lead to another insolvency, with liquidation very much on the cards if this practice continues at the scale suggested.
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. Mr Urmston is not disqualified from acting as a director. His companies have no recorded regulatory action against their previous operator’s licences. Mr 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 Mr Urmston did think to bring with him to the hearing.
But on the substantive issue, I am not satisfied that Mr Urmston, as director, is not unfit to hold a restricted goods vehicle operator’s licence. I reach this conclusion on the basis of Mr 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 thirteen years means that to allow any company of which Mr 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.
Mark Hinchliffe (DTC)
16 July 2026