News |Insolvency

2nd August 2022

Bankruptcy restrictions for abuse of Bounce Back Loan Scheme

Ten-year restrictions for man who obtained a loan he was not entitled to.

An unemployed man from Leamington Spa has been given ten-year bankruptcy restrictions for securing a £50,000 Bounce Back Loan for his business that had never traded.

Zahoor Ahmed Chaudry applied for the loan in June 2020, despite his company being ineligible under the scheme. Moreover, in his application, he fabricated a £200,000 turnover, so he could be given the maximum loan available (£50,000).

Chaudry, 49, filed for bankruptcy in December last year, leading the Insolvency Service to investigate his financial conduct. He initially claimed “that his recently deceased wife had taken control of his bank account and spent the money without his knowledge.”

Investigators found that Chaudry used £40,000 of the loan to pay a law firm, for which he then “provided a glowing review on their website”. Chaudry also denied posting the review.

Kevin Read, Official Receiver at the Insolvency Service, said: “those like Zahoor Chaudhry who have cynically abused the scheme should expect to be caught and punished.”

A ten-year bankruptcy restrictions undertaking from Chaudry was accepted by the Secretary of State for Business, Energy and Industrial Strategy, effective from 20th June 2022.

Bankruptcy restrictions undertakings have the same effects as orders, but are settled outside of court. The restrictions include needing to disclose your status when applying for £500 or more of credit and a ban from holding company directorships without the court’s permission.

On a positive note, the Official Receiver expects to recover some or all of the money, having instructed lawyers on the matter.

Insolvency and debt investigations

Seeing the whole picture in insolvency and debt cases is key to maximising returns to creditors. For more information on how ESA Risk can help to identify hidden assets or locate targets who have gone to ground, contact Mike Wright, Investigations and Risk Management Consultant, at mike.wright@esarisk.com, on +44 (0)843 515 8686 or via our contact form.

You can also learn more from our Insolvency & Debt Investigations brochure.

 

Image: William Barton / Shutterstock.com

Insolvency & Debt Investigations

Seeing the whole picture in insolvency and debt cases is key to maximising returns to creditors.

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