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A recap of March 2023’s Bounce Back Loan Scheme-related stories.
After February’s relative lull in Bounce Back Loan-related announcements, March saw a return to form with five stories shared by the Insolvency Service.
As in previous months, we’ve put together a summary of those announcements:
March 2023’s roundup starts with two directors who dissolved their companies soon after acquiring Bounce Back Loans, without notifying their creditors.
Simon Gorgin, from Kings Langley in Hertfordshire, obtained a £45,000 Bounce Back Loan in May 2021 through his company P3 Estates Ltd. He had applied to dissolve the company a month earlier, in April 2021. Gorgin did not inform the Bounce Back lender that he had applied to dissolve P3 Estates.
Despite the company having been incorporated in April 2010, investigators revealed that P3 Estates had never traded and was therefore not entitled to support through the Bounce Back Loan Scheme (BBLS).
Gorgin fabricated a 2019 turnover of £180,000 in order to acquire the loan. Furthermore, he transferred the full amount of the loan from P3 Estate’s business bank account to his personal bank account three days after receiving the funds.
Gorgin has received a twelve-year director disqualification.
Rukia Begum ran a takeaway in Oldham from September 2018. She obtained a £35,000 loan through the BBLS for her company New Polash Oldham Ltd in May 2020.
In July 2020, only two months later, Begum applied to dissolve the company and failed to tell her creditors about the application.
In addition, Begum had continued to trade in the three months before applying for the company’s dissolution – also an offence under the Companies Act 2006.
And, Insolvency Service investigators found that New Polash’s turnover had been inflated by Begum in her BBLS application. The director stated that the company’s turnover was £154,000 when it was, in fact, less than £44,000. As a result, Begum had been able to obtain a loan at more than three times the value New Polash was entitled to within the scheme.
Begum has been banned from holding directorships for ten years.
Peter Smith, Deputy Head of Dissolved Company Investigations at the Insolvency Service, said about the cases:
“Bounce Back Loans were designed to help businesses to survive the pandemic. Rukia Begum and Simon Gorgin abused the scheme and took taxpayers’ money at a time when many businesses were in genuine need.”
The money is yet to be recovered from either director.
James Ireri successfully applied for the maximum £50,000 allowed under the Bounce Back Loan Scheme (BBLS) through his Surrey-based recruitment business Safi Care Ltd in May 2020.
A lack of company account keeping by Ireri meant that Insolvency Service “investigators were unable to determine whether Safi Care Ltd had ever been eligible to apply” for the loan based on the company’s turnover.
During the Covid pandemic, companies were able to apply for either a Bounce Back Loan or a Coronavirus Business Interruption Loan. Despite having secured a loan through the BBLS, Ireri applied for and obtained a £100,000 loan (from a different lender) through the Coronavirus Business Interruption Loan Scheme, three months after Safi Care was given its Bounce Back Loan.
Businesses were allowed to “obtain a second loan if the money was used to repay the first in full.” However, Safi Care went into liquidation a year later (in August 2021) owing around £231,000 including the full amount of both loans.
In the fifteen months between obtaining the first loan and Safi Care’s liquidation, nearly £500,000 was withdrawn from the company’s bank account, with over £80,000 used by Ireri “for personal spending” and nearly £94,000 transferred into his personal bank accounts.
Ireri has received a seven-year director disqualification.
Michael Higgins, from Sheffield, ran Steel Rigging Ltd – a company working on outside TV broadcasts providing driving services – from March 2015. Higgins obtained a £20,000 Bounce Back Loan in November 2020 by claiming his company’s turnover in 2019 was £80,000.
In fact, Steel Rigging’s 2019 turnover was around half the figure stated by Higgins. The company was therefore entitled to only half of the acquired loan (at most).
Steel Rigging went into liquidation just over a year later in December 2021, owing the full amount of the Bounce Back Loan.
Higgins has been banned for eight years.
Dean Miller, also from Sheffield, incorporated his company IBODYTALKS Ltd in April 2019.
Companies incorporated after 1st January 2019 were told to use an estimated turnover in their Bounce Back Loan applications. Miller claimed that IBODYTALKS had been dormant until April 2020 when he applied for a £42,000 loan in May 2020. However, investigators found that the company has been trading since December 2019 and Miller had exaggerated the turnover estimation in comparison to money received by the company during its trading period.
In addition, “Miller transferred £41,000 to a connected company, and did not provide any evidence to show the money was used for the benefit of IBODYTALKS”, one month after receiving the £42,000 loan.
Miller has been disqualified for nine years.
Director disqualifications prevent individuals from directly or indirectly becoming involved in the promotion, formation or management of a company without the permission of the court.
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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