The Insolvency Service continues to investigate businesses that deliberately abused the Bounce Back Loan Scheme - a government scheme set up to help businesses survive during the Covid-19 pandemic – resulting in further director disqualifications and, in some cases, convictions.
Banned: The Director of an Engineering Firm
Mr Hansen, a sole director of a property and engineering firm, has been disqualified as a director for ten years after overstating his firm’s turnover by almost twenty times the actual amount to claim a £40,000 Bounce Back Loan to which his business was not entitled.
Under the Bounce Back Loan scheme, companies could apply for a loan of between £2,000 and £50,000, up to a maximum of 25% of their turnover. This money had to be used for the economic benefit of the business.
Mr Hansen applied for a loan under the scheme, claiming his company’s turnover was £160,000. However, his firm struggled during the pandemic and subsequently went into liquidation, owing more than £42,000 and triggering an investigation by the Insolvency Service. It was then discovered that the company’s turnover up to June 2020 had actually been only £8,294, meaning that the company had received nearly £38,000 more than it had been entitled to through the scheme. Investors also found that Mr Hansen transferred a substantial amount of that money out of the company’s bank account to himself and was unable to prove that this money had been utilised for the economic benefit of the company. He signed a disqualification undertaking which prevents him from acting as a director for ten years.
Convicted: Two Directors who Fraudulently Claimed Loans
In separate cases, two directors who were convicted for offences under the Companies Act 2006 following abuse of the Bounce Back Loan scheme, have been given suspended prison sentences of twenty months and six months respectively.
A sole director obtained a £50,000 loan for his company based on an inflated turnover and then went on to apply to dissolve the company two weeks later. He also tried to obtain a £50,000 loan for his other company even though the company had only been established on 31 March 2020 and was therefore not eligible for any funding through the scheme. As a result, he was sentenced to 20 months imprisonment, suspended for 18 months, as well as three hundred hours of unpaid work. He has also undertaken to repay the £50,000 loan to the bank.
Ms Parkes, a director of a company that ran a hotel, requested financial help from the Bounce Back Loan scheme and secured a £20,000 loan immediately before she applied to dissolve the company. It was made clear in the striking-off application to dissolve the company that interested parties and creditors, for example, a bank with an outstanding loan, must be informed within seven days of making such an application. The form also stressed that failure to inform interested parties was a criminal offence but Ms Parkes still failed to do so.
She was sentenced to 26 weeks imprisonment suspended for twelve months and an unpaid work requirement of 120 hours.
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