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).
November was a particularly busy month for such news, with ten separate announcements detailing a total of 137 years of director disqualifications and bankruptcy restrictions published.
Here’s a roundup of what was announced.
Beginning our November roundup is the most stringent punishment announced this month.
A thirty-four-year-old man from Middlesbrough has been handed a prison sentence of fifteen months, suspended for eighteen months, for his abuse of the Bounce Back Loan Scheme.
Ben Hamilton successfully applied for a Bounce Back Loan (BBL) in May 2020 for his business, Netelco Ltd. Once the loan funds had been paid into Netelco’s bank account on 14th May 2020, the following day, Hamilton filed to dissolve the company.
The company dissolution process dictates that creditors must be notified of the application within seven days. Hamilton failed to notify the institution that provided Netelco with the BBL – a criminal offence.
Initially, Hamilton refused to cooperate with the Insolvency Service investigation team, including non-attendance at an interview with the investigators. It took a restraining order on Hamilton’s bank accounts (under the Proceeds of Crime Act) to convince him to engage in the process, at which point he repaid the loan in full.
Julie Barnes, Chief Investigator at the Insolvency Service said: “This was a clear case of attempted fraud by a company director who thought he could abuse the Covid-19 financial support schemes and get away with it.”
Hamilton was sentenced at Teeside Crown Court on 15th November 2022 and ordered to pay costs of £2,500 in addition to the suspended sentence, having pleaded guilty to charges on 14th October at Teeside Magistrates’ Court.
Simon King, from Plymouth, was already subject to a five-year bankruptcy restriction for Bounce Back Loan abuse when he was handed a ten-year director disqualification effective from 7th November 2022 for further abuse of the scheme.
King’s bankruptcy restrictions relate to his false claim of a £50,000 BBL as a sole trader under the name Blackfriars Contracts Division – a loan he wasn’t entitled to.
An investigation has since found that King obtained two additional loans under the BBLS totalling £80,000, which is more than the £50,000 maximum allowed by the scheme.
King ran Blackfriars Contract Ltd, a printers in Plymouth, until December 2020 when the company went into liquidation with debts of over £230,000 including the full Bounce Back Loan amounts.
Mohammed Subhan ran a restaurant in Dudley through his company Zara Spice Limited, as well as a catering business called Thania Spice. He applied for his own bankruptcy in March 2022, with the Official Receiver appointed as his Trustee.
The Official Receiver found that Subhan had obtained £70,000 under the BBLS through his self-employment business, Thania Spice. Subhan exaggerated his turnover when applying for the loans. He was able to acquire a £50,000 loan, initially, by stating a turnover of £200,000. In reality, his turnover for the relevant period “was closer to £3,000 to £4,000” – fifty times less than he claimed.
Subhan went on to successfully apply for two more loans. He “withdrew more than half the funds in cash” and spent thousands on expenses which weren’t for the benefit of his business.
As a result of the findings, Subhan has been given an additional eleven years of bankruptcy restrictions.
“He posed a significant risk to creditors and eleven years of restrictions will severely curtail Mohammed Subhan’s ability to abuse his future lenders”, said Karen Fox, Deputy Official Receiver.
Directors overstating their company’s turnover for 2019 (the relevant period for the BBLS application) is a common theme in many of the cases reported by the Insolvency Service.
Anthony Killarney, from Brentwood, successfully applied for a £50,000 loan by stating his company’s turnover was £600,000. However, the turnover for K11 Developments Ltd – Killarney’s property development company – was actually £0 for 2019 and for the two previous years. The company went into liquidation at the end of 2021, owning nearly £400,000. Killarney has been disqualified as a director for eleven years.
Shafiqur Rahman claimed a £25,000 loan for his sports coaching business in Manchester – “more than eleven times the money to which the business was entitled”. Rahman also spent £20,000 of the loan, paid to his company Aspire Sports Coaching & Partners Ltd, “without being able to prove it had been used to support the company.” He has received an eleven-year ban.
Nija Bite Limited director Malcolm Forbes obtained the maximum £50,000 BBL by claiming a turnover of £225,000. However, the takeaway and mobile food stand business’s actual turnover “was closer to £24,000”, which would have made Forbes’ company eligible for a £6,000 loan. Forbes has been given a ten-year director ban.
Similarly, Avin Habash falsely stated the turnover of his takeaway business, Hot Spot Liverpool Limited, was £200,000 – around double the actual figure – when applying for a £50,000 BBL. Habash has been banned for ten years, as well.
Michael Hansen claimed a £160,000 turnover for his company, MH Property & Engineering Services Limited, when it was, in fact, £8,294. Hansen obtained a £40,000 loan under the BBLS, rather than the £2,000 (approx.) loan his company was entitled to. Further compounding the situation, Hansen transferred £24,600 of the loan monies to himself over a ten-month period and “was unable to show investigators that the money had been used for the economic benefit of the company.” He, too, has received a ten-year director disqualification.
Jason Meads obtained £37,500 from two Bounce Back Loans by falsely claiming the turnover of his business, Hodl Clothing Limited, was £150,000. In reality, the company’s 2019 turnover was nil. He has been banned for ten years.
Another takeaway owner, Muhammad Rais from Leicester, stated his company’s turnover was £200,000, entitling him to the full £50,000 BBL. However, Lokma BBQ Ltd’s actual turnover was approximately £74,000, meaning Rais received more than twice the amount he should have from the scheme. “Rais has agreed with the liquidator to re-pay £8,000 of the money owed through monthly installments.” He has been disqualified for nine years.
Another term of the Bounce Back Loan Scheme was that funds must be used only for the economic benefit of the company obtaining the loan.
Kamil Ozkan ran Martinos Italian Kitchen in Peterlee through the company Papa Peterlee Limited. Ozkan legally obtained a £50,000 Bounce Back Loan, but transferred around £37,500 of the loan monies to his personal account. As a result, Ozkan has received a six-year director disqualification.
Lee Mankelow, from Nottinghamshire, also claimed a £50,000 loan, which his company, Wolf Timber Ltd, was eligible for. However, Mankelow transferred all of the £50,000 to a former director of the business, the day after receiving the loan funds. He, too, has been banned for six years.
Some directors applied for Bounce Back Loans for businesses that were not even trading at the time of the Covid-19 pandemic.
Thirty-one-year-old Lavinia-Larisa Mociar obtained a £50,000 loan for L&M Construct Ltd, based in Harrow, London. Her company had ceased trading a year before she applied for the BBL.
In addition, Mociar overstated the company’s 2019 turnover and withdrew the loan funds as cash – both against the terms of the scheme. She has been disqualified for eleven years.
David Okot has also been banned for eleven years, after he applied for a £50,000 loan for B&S News Ltd which traded as B&S Newsagents in Lewisham, London, but closed down in January 2020 – six months before Okot applied to the BBLS.
And finally, Selvendran Ramar, from Southampton, obtained a £45,000 Bounce Back Loan in July 2020. He stated the turnover of his business, SJSA Ltd, was £180,000 a year. To be eligible for the scheme, businesses had to have been trading on 1st March 2020. SJSA Ltd was not incorporated until 30th March 2020. And, by the time of Ramar’s application, the company had made only £5,500 in three months.
Further breaking the terms of the scheme, Ramar then transferred £35,000 of the loan to his personal account and the remaining amount to a family member.
Ramar has been disqualified as a director for eleven years, and the Liquidator – Begbies Traynor Group – has so far recovered £25,000 of the loan.
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 firstname.lastname@example.org, on +44 (0)843 515 8686 or via our contact form.
You can also learn more from our Insolvency & Debt Investigations brochure: