What is it about the recruitment sector that allows a business to fail and return in a new guise over and over again?
The latest to hit the headlines has effectively emerged from insolvency for the third time in four years, leaving millions of pounds in unpaid liabilities, including significant tax debts. Some have argued that the case of Sert Group and Sert Training is an egregious example of ‘phoenixism’, which HMRC says is responsible for around 22% of the £3.8 billion in tax losses associated with insolvencies, equivalent to roughly £800 million annually.
Phoenixism refers to the process whereby a company that has entered insolvency is replaced by a new entity that continues the same or similar business while leaving behind the debts of the previous company. The term derives from the mythological phoenix, symbolising rebirth from ashes, and in a corporate context it describes how a failed company may effectively reappear under a different legal structure. While phoenixing can be lawful when conducted transparently through insolvency procedures, it is often controversial because creditors—particularly tax authorities—may suffer significant losses.
In the UK, phoenixism typically occurs through insolvency processes such as administration or liquidation. The assets of the insolvent company may be sold, sometimes through a “pre-pack” administration, and transferred to a new company that continues trading. In principle, such arrangements can preserve jobs and maintain business operations that might otherwise disappear entirely. However, concerns arise when the same directors or management teams remain involved in the successor company while the previous entity’s debts remain unpaid. This creates a perception that business owners can shed liabilities while continuing to benefit from the same enterprise.
The collapse in January 2026 of the two Hampshire-based Sert companies has raised eyebrows. Their assets were subsequently acquired for £196,304 by a separate company, Meraki 6, which continued operating the business. Crucially, the deal required the previous management team to remain involved in the company after the acquisition. The management included the former chief executive and chief financial officer, who had also run earlier versions of the same business.
This restructuring follows a series of similar insolvencies connected to the same business operations. In 2022, the directors oversaw a recruitment firm called 3R Global, which entered administration before its assets were purchased by another entity, Sert Workforce Solutions. That company later collapsed in 2024 and was replaced by Sert Training, which itself lasted around fifteen months before entering administration again. Across these three corporate failures, creditors appear to have been left with combined losses of approximately £7.6 million, including about £4.5 million owed to HMRC.
The purchasers of the latest business have denied that the arrangement constitutes phoenixism, arguing that the acquiring company is not formally connected to the previous owners. Nevertheless, the continued involvement of former management has raised questions about whether the process effectively allowed the business to continue while liabilities remained with the insolvent entities. Moreover, lawyers for Meraki 6 have said its purchase of the Sert business was not phoenixing because Meraki is not connected with the previous Sert owners and there were no common directors.
The recruitment sector’s combination of low restart costs, volatile revenue, contractor tax exposure, and permissive restructuring mechanisms makes it particularly prone to phoenix-style restructurings. Critics argue that this creates an uneven playing field, as companies that shed liabilities through insolvency can re-enter the market with fewer financial obligations than competitors and ready-made client relationships intact.
Even so, it’s true that forms of phoenix restructuring can produce positive economic outcomes. By transferring viable parts of a business to a new entity, jobs can be saved – which Meraki argues – and activity maintained. In some cases, creditors may recover more through the sale of assets to a new company than through a full liquidation. However, the repeated re-emergence of recruitment firms through insolvency procedures has intensified scrutiny from regulators and policymakers.
Either way, the latest recruitment sector example illustrates the tension at the heart of phoenixism. While the process can be a legitimate mechanism for rescuing viable businesses, repeated insolvencies involving the same management highlight the risk that corporate restructuring may be used to avoid liabilities. Expect to see a phoenix rising from the ashes of another recruitment firm this year, but these moves will remain controversial and closely monitored.
Written by James Bryan, Senior Manager at Buchler Phillips, an independent boutique firm, with an impeccable Mayfair London heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.