Sisters Karen Mortimer, 67, and Joanna Seawright, 54, became directors of 138 failing companies without verifying their financial positions, failing to investigate the location of more than £42m in assets, and leaving creditors £67m in debt.

When the Insolvency Service launched an investigation, Mortimer and Seawright did not dispute their misconduct and agreed to be disqualified for seven years rather than taking the case to court.

Mortimer, who lives in Tenerife, and her sister Joanna Seawright, from Dumfries, Scotland, ran GPA KLM Ltd and Summers & May Ltd. These companies were part of the Atherton web, which was shut down in 2024 following an earlier Insolvency Service investigation.

Until they were disbanded, Atherton Corporate UK (Ltd) and Atherton Corporate Rescue Limited provided a corporate rescue scheme whereby directors of companies in financial distress were encouraged to sell their businesses as an alternative to formal insolvency proceedings.

Atherton operated through a complicated structure with five associate companies, two of which were owned by the sisters, Mortimer and Seawright, and they purchased the companies in financial distress and provided them with new directors.

Investigators at the Insolvency Service discovered that the sisters had taken control of 138 businesses referred to them by Atherton companies, while the ‘most recently filed accounts of the 138 companies showed assets totalling more than £42m, but had debts of £67m.

Both Mortimer and Seawright waited for the companies to be struck-off, or for a creditor to petition for their administration or liquidation, before they stepped in. 

But the sisters failed to verify the true financial position of the companies they were taking control of, relying solely on the word of Atherton and the former directors of the distressed companies’. They also did not question whether the companies still held the assets or how they had been disposed of prior to acquiring them. 

Dave Magrath, director of investigation at the Insolvency Service, said: ‘Karen Mortimer and Joanna Seawright deliberately frustrated insolvency legislation, playing a vital role in the smooth running of the Atherton scheme. 

‘Through signing up to be disqualified as company directors, both have not disputed that they failed in their duties and put creditors at risk of financial loss. 

‘The Insolvency Service’s core function is to safeguard the integrity of the insolvency regime, and we will not tolerate conduct that undermines this vital framework or that seeks to enable phoenixism.’

Sham insolvency firms misled directors about debt liability | Sep 2024