Ranked No.5 in Recruiter’s Fast 50 fastest growing recruitment companies in January 2009, the First People Solutions Group of companies - First People Solutions (Holdings) Ltd, First People Solutions Group Ltd, First People Solutions Ltd and Jobact Petrochem Ltd - went into administration on 12 March.

According to a Statement of Insolvency Practice 16 obtained by Recruiter, FPSG “suffered a loss and experienced a number of significant bad debts, which had a substantial adverse impact on cash flow. Consequently, the Group was struggling to meet its liabilities as they fell due”.

However, two directors of the group, John Hailstone and Lesley Taylor, bought the old companies’ trading assets from the administrators, KPMG, for £5.57m and now run six specialist recruitment firms and a business process solutions firm trading under the First People Solutions Group banner.

A source at administrators KPMG confirmed that a pre-pack administration had taken place, with the assets of the four companies bought by MyBPOS and TEC Group International Recruitment. Hailstone and Taylor are directors of those companies.

Companies House records show that both TEC Group International Recruitment and MyBPOS were set up on 18 February. Between December 2009 and 18 February this year, Hailstone and Taylor set up the following companies of which they are directors: Net Talent, Engage PSG, First People Care Solutions, First People Solutions and FPSG Connect. Hailstone and Taylor are also directors of First People Ventures, a holding company for the new group, set up on 29 December 2009.

Hailstone told Recruiter the purpose of setting up the new companies was to create niche businesses, and “to reward staff with shares in those individual companies rather than with shares in the group as a whole”.

He said he had been working on the new management equity model for the last year. He also said that he could have personally raised the money to cover the company’s most significant bad debt but chose instead to inject money into a new structure. At this point, the new business is strong, Hailstone added.

The KPMG source said that some creditors were still owed money, telling Recruiter: “Some creditors have been paid, and some creditors have not been paid.”