News |Bounce Back Loans

1st February 2023

Bounce Back Loans: January 2023 news roundup

2023 started as 2022 ended – with a host of Bounce Back Loan Scheme-related news and announcements from the Insolvency Service. Here’s a recap of January 2023’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).

January 2023 was another busy month for such news. Here’s a roundup of what was announced:

Barclays actively looking to recover Bounce Back Loan funds

In early January, City A.M. reported that “Barclays is chasing down Covid-19 business loan cash“, backed by the litigation funder Manolete Partners.

Barclays paid out nearly £11bn in Bounce Back Loans, making it the biggest lender in the scheme. Despite the loans being government-backed, Barclays is now actively pursuing “more than 100 companies that have defaulted on” repayments.

While this is the first such programme from a major lender to hit the headlines, there are other similar projects underway elsewhere in the market. Steve Cooklin, Manolete’s chief executive, “told City A.M. that outside of the Barclays project…[Manolete] has worked on a series of projects to recover ‘misappropriated Bounce Back monies’ over the last 18 months.”

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Company dissolutions

Sameer Saeed, from London, and Antonia Parkes, from Conwy, have been handed suspended prison sentences for their abuse of the Bounce Back Loan Scheme (BBLS).

Saeed obtained a £50,000 loan for his company, Digital Business Box Ltd, by overstating the business’s turnover. Only two weeks later, he applied to dissolve the company.

In what was described as “an aggravating aspect”, Saeed also tried to secure a £50,000 Bounce Back Loan for his other company, The Home Wills Ltd, despite it being established after the cutoff point for BBLS eligibility. His application was unsuccesful.

Saeed pleaded guilty to four offences under the Companies Act and Fraud Act, and was sentenced to 20 months imprisonment, suspended for 18 months, as well as 300 hours of unpaid work.

In a separate case, Parkes was sentenced to six months in prison, suspended for 12 months, and 120 hours of unpaid work, for an offence under the Companies Act.

Parkes secured a £20,000 loan through the BBLS, “immediately before she applied to dissolve the company.”

When dissolving her company, Conwy Valley Lodge Ltd, Parkes did not notify the Bounce Back Loan lender, despite the notification of interested parties and creditors within seven days being a legal requirement.

In a similar case that has resulted in an eleven-year disqualification for the director, David McGuinness, from Birmingham, obtained a £50,000 loan for his company, MC-Dalt Scaffolding Services Ltd, by overstating the business’s turnover. McGuinness “stated the company’s turnover as nearly £300,000 when its accounts for 2019 showed turnover of less than £20,000.”

The use of the loan funds by McGuinness is questionable, with £15,000 transferred out of his business account the day after receiving the loan with the bank reference ‘Dave’, and “[a] further £35,000…transferred to various third-parties.”

McGuinness applied to dissolve MC-Dalt Scaffolding Services Ltd only two months after securing the Bounce Back Loan. He did not notify interested parties and creditors, including the lending bank.

Peter Smith, Deputy Head of Insolvent Investigations at the Insolvency Service, said: “David McGuinness clearly abused it by making false declarations to his company’s bank.”

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Exaggerated turnovers

Directors inflating their company’s turnover in order to secure more money through the Bounce Back Loan Scheme is a common theme of these monthly news roundups.

Mathius Thompson, from Birmingham, took out a Bounce Back Loan worth £50,000 through his company, West Midz Cars Ltd, in May 2020. In his application, Thompson stated that the business’s turnover for the relevant year (2019) was £287,500. In the Insolvency Service investigation which followed the used car salesroom company’s liquidation in August 2021, investigators found that the company’s actual turnover for the period was £2,500 more than 100 times less than Thompson had claimed. Thompson has been banned from holding directorships for eleven years from 30th January 2023.

Muhammad Arif, from Uxbridge in London, ran a clothing business for nearly ten years, trading as Ayesha Boutique. He applied for the maximum Bounce Back Loan amount of £50,000 in June 2020, based on a stated turnover of £219,000. In reality, his turnover was “around ten times less than he had claimed in the application.”

In addition, the Official Receiver has been “unable to verify the explanation [Arif] gave to account for…payments” made using the loan moneies.

Arif applied for his own bankruptcy and was made bankrupt in December 2021 owing more than £50,000. He has been made the subject of bankruptcy restrictions lasting ten years for his abuse of the Bounce Back Loan Scheme.

Vasile Matcas, from Haverhill in Suffolk, also claimed the full £50,000 available under the scheme for his business, Matcas Ltd. Matcas stated a company turnover of £280,000. However, investigators found that Matcas Ltd’s actual turnover was under five times less than that, at only £49,200.

When Matcas Ltd went into liquidation in July 2021 – at that time trading as a carwash it owed “the full amount of the loan”.

Matcas was disqualified as a director for ten years.

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Misuse of Bounce Back Loan funds

Under the terms of the Bounce Back Loan Scheme, loan funds had to be used for the economic benefit of the company.

Ioan Mociar made payments of nearly £40,000 from his business’s bank account during a three-week period in 2020, after securing a £41,000 Bounce Back Loan, “without any evidence to show that they were for the economic benefit of the company.” Additionally, Mociar’s business, Midi Construction Ltd, had claimed more money than it was entitled to under the scheme, as Mociar’s estimated turnover for the building company and the actual turnover at the end of the first year of trading (to the end of May 2020) were wildly different. Mociar has been disqualified for eleven years.

Moira Wood has been banned for eight years for her misuse of Bounce Back Loan funds obtained through her IT consultancy, Clockwork Compliance Services Ltd. Wood secured a £24,000 loan in September 2020, then “transferred £23,400 to herself between October 2020 and January 2022, just before the company folded, with no evidence that the money had been used for the benefit of Clockwork Compliance Services.”

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A charity case

And finally, Darren Baker has been banned from becoming a director for seven years, effective from 15th December 2022 (first reported in January).

Baker secured £50,000 from the Bounce Back Loan Scheme an initial loan of £45,000 and a £5,000 top-up through his charity, The Leanne Baker Trust. Baker claimed the charity’s 2019 turnover was £200,000. In reality, it was around £26,000, meaning the charity was not eligible for funding under the scheme.

Baker then put around £38,000 of the loan to personal use, including “over £25,000 to pay off personal legal fees”.

“Despite the humanitarian purpose of the trust as established, Darren Baker took advantage of the support available during this difficult time for his own personal gain”, said Rob Clarke, Chief Investigator at the Insolvency Service.

On a rare positive note in these announcements, the charity’s liquidator “has subsequently recovered the full amount” of the Bounce Back Loan.

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.

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