MASSIVE RISE IN COMPANY DIRECTORS DISQUALIFIED FOR COVID LOAN ABUSE
Released On 29th Apr 2024
According to the latest Insolvency Service figures, 80 per cent more company directors were banned for abusing Covid loan schemes in 2023-24 than in the previous year.
This amounts to more than 800 individuals who were banned on average for more than 10 years.
As a spokesman for the Insolvency Service commented, the agency is taking “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.
He promised that teams dedicated solely to investigating Bounce Back Loan misconduct will mount investigations to “remove rogue company directors from the corporate arena.”
The Covid Bounce Back Loan Scheme (BBLS) was introduced at the start of the pandemic in 2020. The scheme helped small and medium-sized businesses borrow between £2,000 and £50,000 at a low interest rate, guaranteed by the Government.
Under the terms of the loan, businesses were entitled to a single loan of up to 25 per cent of their turnover under the scheme and applicants could only use the loans for the economic benefit of the business and not for personal purposes.
However, many company directors were found to have abused the scheme by either inflating the turnover of their businesses or taking the money and then using it to feather their personal nests.
Commenting on the statistics, Roger Isaacs, Forensic Partner at Milsted Langdon, said that the Government has continued to clamp down on business owners they believe to have provided misleading information to receive money they were not entitled to.
He said: “Forensic accountants are often asked to investigate how money raised by loans or other forms of investment have been utilised after things have gone wrong and creditors have lost out.
“However, the disqualification of a director is seldom perceived as being an effective tool by victims because it does nothing to help recover money that has been lost. Furthermore, those disqualified typically fall into one of two categories, namely those who are so traumatised by the experience of having been at the helm of a company that failed that they have no intention of ever being a director again and those hardened criminals who are all too willing to find stooges to act as directors for them while they continue to exert executive control of their companies from the shadows. In neither case does disqualification achieve much by way of asset recovery, deterrent or even punishment.”
Sources: The Times
