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As with the rest of the year, December 2022 was another busy month for Bounce Back Loan Scheme-related news. Here’s a recap of the month’s stories.
As we’ve been reporting, the Insolvency Service’s recent press releases have been awash with director disqualifications and bankruptcy restrictions related to misuse of the Bounce Back Loan Scheme (BBLS).
December 2022 was another busy month for such news. Here’s a roundup of what was announced:
A London letting agent who made four applications to the Bounce Back Loan Scheme has been handed an eleven-year director disqualification.
Laszlo Szabo obtained £100,000 from the scheme through three successful applications to two different banks. Szabo was only rejected during his fourth attempted application.
In October 2020, Szabo first applied for a £38,000 Bounce Back Loan for his Holloway Road-based Letting Base Ltd, and the loan was made available to the company almost immediately. Against the terms of the scheme, Szabo then applied for a second loan from a different bank, only five days after his first application. He obtained the maximum £50,000 loan available under the BBLS.
Ten days later, Szabo returned to the first bank and successfully requested a top-up of £12,000 to the initial loan (in itself allowable under the terms of the scheme, but taking his company’s borrowing further above the overall Bounce Back Loan limit).
With £100,000 banked so far, the next day, Szabo applied for another top-up – this time from the second bank and for the maximum £50,000 again. This was not permissible under the terms of the scheme and was rightly rejected by the lender, presumably because they could see that Letting Base Ltd had already been given a £50,000 loan from their own records.
The Insolvency Service started to investigate Letting Base Ltd in 2022, when the company went into liquidation “owing more than £243,000, including the full £100,000 of the Bounce Back Loan money”.
Deputy Head of Investigations at the Insolvency Service, Nina Cassar, said:
“Laszlo Szabo made false declarations to his company’s banks, and then entered liquidation having made no repayments towards its Bounce Back Loans, which resulted in a loss of £100,000 of public funds.
“His blatant and repeat abuse of taxpayer’s money has resulted in a lengthy disqualification, which will serve to safeguard the economy from traders who exploit financial support packages designed to help UK businesses.”
As is implied by Cassar’s statement, it is “unlikely” that the loans will be repaid.
Szabo’s ban began on 12th December 2022 and last for eleven years.
Two cases now of bankrupts who have been made subject to additional bankruptcy restrictions due to their abuse of the Bounce Back Loan Scheme. While both cases were finalised earlier in 2022, they were first reported in December.
Nadia Butt, from Birmingham, obtained a £50,000 Bounce Back Loan by stating that her business had been trading on 1st March 2020 and that “her anticipated turnover was £220,00” – neither of which were true.
Despite stating that she wished to “start an online consultancy”, Butt paid out the loan money to family members and a friend, with no evidence that the payments were for the benefit of the business.
She was made bankrupt in August 2021 and the Official Receiver discovered details of the loan when they were appointed as her trustee.
Butt is now subject to an eleven-year bankruptcy restrictions undertaking.
Dorota Suchocka, of Barnes in London, secured three Bounce Back Loans in October 2019 worth a total of £75,000. In the applications, “Suchocka used a fake employer and inflated her income as being four times higher than what she earned as a mini cab driver.” In fact, her average monthly income was lower than the combined monthly repayments across the three loans.
Suchocka was made bankrupt in October 2021 and has been subject to a ten-year bankruptcy restrictions undertaking since 30th May 2022, following an investigation by the Official Receiver while appointed as her trustee.
Forty-three-year-old Shahzad Arshad, from Glasgow, ran two companies until January 2022, by which point both had entered liquidation.
Through Town Discount Ltd and Naz Accessories Ltd, Arshad successfully applied for £100,000’s worth of Bounce Back Loans – the maximum £50,000 for each company.
Insolvency Service investigators found that Town Discount Ltd was ineligible for the scheme, as it had not started trading until February 2020. Arshad stated that Naz Accessories Ltd’s turnover was more than twice the actual figure of £98,300, meaning the company was only eligible for up to £24,500 under the scheme and not the £50,000 secured by Arshad.
The director was banned for eleven years from 21st November 2022.
Savio Pereira, of Market Harborough, has been disqualified for eleven years for exaggerating his company’s turnover in a Bounce Back Loan application and seemingly using the loan funds for activity unrelated to the “economic support” of his business.
Pereira secured a £50,000 Bounce Back Loan for his company Himalayan Zest Takeaway Limited which traded in Lutterworth until November 2021 when it went into liquidation.
The director paid £10,000 of the loan to himself, withdrew £16,800 in cash and paid £28,000 to an unknown recipient.
Sajid Valimohammed, of Leicester, has been disqualified for eight years for misconduct including abuse of the Bounce Back Loan Scheme.
Valimohammed’s company, J Dee Designs Ltd, went into liquidation in December 2020, triggering an Insolvency Service investigation. The investigation showed that the director failed to keep sufficient records, including company accounts. As a result, Valimohammed was unable to prove that withdrawals of around £315,300 from the company’s account – including 199 transfers totalling £286,000 to Valimohammed’s personal account – were transactions “for legitimate trading activity”.
£30,000 of this total came from a Bounce Back Loan. The director’s lack of record-keeping meant he was unable to show “whether the loan money had been used for the benefit of the company.”
Furthermore, investigators could not “verify whether J Dee Designs had paid the correct amount of tax it owed, or to ascertain the true financial position of the company when it went into liquidation, including whether liquidators would be able to make any recovery of debts.”
John McGarvey’s abuse of the Bounce Back Loan Scheme ticked so many of the boxes we see in different BBLS announcements, that we published a full article about his case when it was first reported on 8th December 2022.
McGarvey obtained more than the maximum allowable total, across more than one loan, by overstating his company’s turnover and he then used the money “for personal gain”.
And to end on some relatively good news – a £50,000 Bounce Back Loan which was falsely obtained by Alexander Cooper, from Glasgow, for his company Traprain Homes Ltd in June 2020 has been paid back in full “following recovery action by the company’s liquidator.”
Cooper stated the company’s turnover as £1,014,930 in his application, leading to him obtaining the maximum loan amount. However, Traprain Homes Ltd was insolvent at the time of the application, having lost more than £113,000 in the preceding period. The company had stopped trading some four months before Cooper applied for the Bounce Back Loan.
The director paid himself the full amount of the loan he acquired for Traprain Homes Ltd – the majority of it after moving it between the company’s various bank accounts.
Cooper was banned for ten years from 14th November 2022.
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.
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