The Insolvency Service Are As Pleased As Punch (With Themselves)

During 2023-24, a total of 831 directors were banned for Covid financial support scheme misconduct, with an average disqualification length of more than nine-and-a-half years, which the Insolvency Service press-release said was “following investigations by the Insolvency Service”.  Clearly, all you IPs out there aren’t doing any investigations prior to filing your CDDA return!

Dean Beale, Chief Executive at the Insolvency Service, said: “Tackling Bounce Back Loan misconduct is a key priority for the Insolvency Service and we are determined to use all our available powers to remove rogue company directors from the corporate arena.  It is important the Insolvency Service is taking such robust action to clamp down on directors who abused Covid support schemes and took from the public purse during the worst global pandemic for 100 years”.

By way of a reminder, the Bounce Back Loan Scheme was introduced at the start of the pandemic in 2020. It helped small and medium-sized businesses borrow between £2,000 and £50,000 at a low interest rate, guaranteed by the government.  Businesses were entitled to a single loan of up to 25% of their turnover under the scheme and could only use the loans for the economic benefit of the business and not for personal purposes.

The enforcement action tools the Insolvency Service can wield (and have) include winding up companies, criminal convictions, compensation orders and director disqualifications.  To date, 1,430 have been disqualified.  These include Richard Ward who signed a 12-year disqualification undertaking in June 2023.

Mr Ward applied for three Bounce Back Loans worth a combined £120,000 in the summer of 2020 on behalf of Colt House Event Management Ltd, Colt House Developers Ltd, and Colt House Bloodstock Ltd.  He claimed the companies ran corporate hospitality golf events, developed a large residential property in Huddersfield and purchased foals for future sale but no income was received in any of the respective bank accounts prior to the loans. £105,000 of the funds then left the account (you’ve guessed it) and turned up in Mr Ward’s.  The statement of affairs filed in all three liquidations show a grand total of no assets, £120,000 of Bounce Back Loans and £20,000 owed to Mr Ward.  There were no other creditors.

In a separate case of back-slapping pride, the Insolvency service reported about Mr North who also signed a disqualification undertaking in November for a period of 12 years.  Mr North obtained a £48,000 Bounce Back Loan in May 2020, which was topped up to the maximum £50,000 in November of that year for his D W Trading (South East) Limited business.  This loan was c£46,000 over the entitlement and was followed by a further £40,000 in a second loan.  Just under £80,000 of the £90,000 obtained was transferred to North’s personal bank account with no evidence that he used the funds for the economic benefit of the business.  

In our final case of déjà vu, Sabine Zogota signed an 11-year disqualification undertaking earlier this month.  The 34-year-old, was the director of Bespoke Surrey Ltd which offered interior design and fitting services.  However, a review of the company’s end-of-year accounts in March 2020 and 2021 revealed it was dormant.  Despite this, Zogota declared an estimated turnover of £200,000 to secure a £50,000 Bounce Back Loan in September 2020 and, surprise surprise, the loan was not used for the economic benefit of the business.   The documents filed at Companies House show no assets and the loan making up nearly 90% of the listed creditors.