Tag: Insolvency

How people and asset tracing can benefit insolvency practitioners

Posted on by Caitlin Duncan

Insolvency practitioners are increasingly required to operate in complex, high-risk environments where assets may be deliberately concealed, transferred or obscured through sophisticated structures. Identifying and recovering those assets is central to maximising returns for creditors and fulfilling statutory duties.

Professional people tracing and asset tracing services play a critical role in modern insolvency investigations. By uncovering hidden assets, locating key individuals and establishing ownership and control, tracing services provide insolvency practitioners with the intelligence needed to make informed decisions and pursue effective recovery strategies.

The asset recovery challenge in insolvency

Asset recovery is one of the most challenging aspects of insolvency appointments. In many cases, practitioners encounter:

  • Incomplete, inaccurate or misleading company records
  • Uncooperative or absconded directors
  • Assets transferred prior to insolvency
  • Complex corporate, trust or offshore ownership structures

As financial misconduct becomes more sophisticated and assets more mobile, reliance on standard searches alone can leave material gaps. Specialist tracing investigations help close those gaps by providing a deeper, evidence-led understanding of asset location and movement.

What is people tracing?

People tracing involves locating individuals whose whereabouts are unknown or intentionally concealed. In an insolvency context, this often includes:

  • Directors and former directors
  • Shareholders and beneficial owners
  • Debtors and guarantors
  • Connected or associated parties

Effective people tracing supports statutory investigations, examinations, service of proceedings and enforcement actions. It can also assist in establishing patterns of behaviour and relationships relevant to insolvency and misconduct investigations.

What is asset tracing?

Asset tracing focuses on identifying, locating, and evidencing assets that may not be disclosed or immediately visible. These can include:

  • UK and overseas property
  • Accounts and financial instruments
  • Business interests and shareholdings
  • High-value personal assets
  • Digital assets, including cryptocurrency

Professional asset tracing goes beyond surface-level searches, using investigative methodologies, specialist intelligence sources and analytical techniques to build a defensible picture of asset ownership, control and movement.

Why asset tracing is critical for insolvency practitioners

Tracing services are particularly valuable where there is suspicion of asset dissipation, concealment or misconduct. Early access to reliable intelligence can help insolvency practitioners:

  • Identify undisclosed or hidden assets
  • Understand pre-insolvency asset transfers
  • Establish beneficial ownership and control
  • Prioritise recovery and enforcement action

This intelligence often informs decisions relating to litigation, settlement, funding and the pursuit of antecedent transactions such as preferences or transactions at undervalue.

Practical uses of tracing in insolvency appointments

People and asset tracing can support insolvency practitioners at various stages of an appointment:

Asset identification and recovery

Tracing investigations help identify assets omitted from statements of affairs or deliberately placed beyond reach, allowing practitioners to assess recovery potential early.

Director and debtor tracing

Locating individuals is essential for interviews, examinations and statutory processes, particularly where directors are evasive or based overseas.

Litigation and enforcement support

Asset intelligence underpins recovery actions, enforcement strategies and applications for freezing or disclosure orders.

Cross-border insolvency matters

Where assets or individuals are located outside the UK, specialist tracing expertise can help navigate jurisdictional complexity and support international recovery efforts.

Evidential value in civil and insolvency proceedings

A key advantage of professional tracing services is the evidential quality of the findings. Intelligence gathered through structured investigations can be used to:

  • Support legal advice and recovery strategy
  • Prepare reports for creditors and the court
  • Assist solicitors and counsel in litigation
  • Inform negotiations and settlement discussions

When conducted correctly, tracing investigations provide insolvency practitioners with reliable, defensible intelligence suitable for use in civil proceedings and regulatory contexts.

The benefits of using specialist tracing services

Engaging specialist investigators offers insolvency practitioners:

  • Access to advanced intelligence sources
  • Objective, independent findings
  • Time and cost efficiencies
  • Reduced risk of missed recovery opportunities

By outsourcing tracing to experienced professionals, insolvency practitioners can focus on their statutory and commercial responsibilities while ensuring asset recovery efforts are thorough and proportionate, enhancing recovery prospects and delivering better outcomes for creditors and stakeholders.

People and asset tracing services from ESA Risk

When it comes to supporting insolvency practitioners with complex investigations, ESA Risk provides expert people and asset tracing services designed to deliver clarity, confidence, and actionable intelligence. Our experienced investigators produce concise, evidence-led findings that help you assess recovery prospects, inform strategy and determine the most effective next steps.

With access to specialist intelligence sources and a trusted global network, ESA Risk is well placed to support domestic and cross-border insolvency matters, even where assets or individuals are deliberately concealed.

To instruct us on an investigation or to find out more about our people and asset tracing services, contact our Client Services team, at advice@esarisk.com on +44 (0)343 515 8686, or via our contact form.

Construction boss banned after selling £100,000 worth of classic cars for £1

Posted on by Caitlin Duncan

A Staffordshire businessman, Kulbarg Singh, has been banned from serving as a company director for 6 years after transferring significant company assets, including a collection of classic cars worth more than £100,000, for just £1.

The case, investigated by the Insolvency Service, is a study in deliberate breach of fiduciary duties and transaction at undervalue, highlighting both the risks such misconduct poses and the type of behaviour that corporate investigators can be tasked with uncovering.

Singh, director of Aldridge Construction Engineering Ltd, transferred around £1.5 million in company assets to another company he controlled, Ace Earth Solutions Ltd, for just over £465,000. Singh had served as a director of Ace Earth Solutions Ltd between February 2020 and April 2022. Among the assets transferred were seven classic vehicles, a Daimler from 1936, Jaguars from the 1960s and 70s, and three Rolls Royces, collectively worth over £100,000, sold as part of this broader undervalued transaction.

The sale caused Aldridge Construction to lose more than £1 million, leaving it insolvent. By the time the company went into liquidation in June 2022, it had no remaining assets and total liabilities exceeding £1.5 million to HM Revenue and Customs and other creditors.

From a corporate investigator’s perspective, this case contains several red flags. First, the related-party nature of the transaction: Singh controlled both the selling and receiving companies. Second, the gross undervaluation: Assets worth six figures were effectively transferred for nothing. Third, the timing: The transaction occurred during a period when the company’s financial health was deteriorating. Together, these factors are typical of a transaction at undervalue to a related party, actionable under UK insolvency law.

Our approach in such cases is to reconstruct the true flow of value. That involves tracing the ownership of assets, assessing fair market worth, and examining the director’s role in authorising the transfer. Physical assets like classic vehicles present an advantage for investigators, they carry transparent market valuations, insurance records, and registration histories. This makes it more straightforward to demonstrate the disparity between the book value and the transfer price, and, crucially, to evidence intent.

The Insolvency Service’s decision to disqualify Singh until 2031 shows the strength of that evidence. But while disqualification protects the public from repeat behaviour, it rarely recovers value for creditors. That is where investigation plays a critical role, by equipping liquidators, creditors, and their legal teams with the evidence needed to challenge undervalued transactions and, where possible, claw back lost assets.

Why this case matters

From my perspective, this case underscores three important lessons for the investigative community and for creditors alike.

Related-party transfers can be obvious. Directors may attempt to move assets to companies they control, but these transactions are usually detectable with detailed scrutiny. Evidence is often in plain sight if you know what to look for.

Intent and breach of duties are central. Investigations hinge on demonstrating that a director knowingly acted against the company’s best interests. Selling £100,000 worth of classic cars to a company they controlled for £1 is a clear example of deliberate undervaluation and a breach of fiduciary duties.

Early detection preserves value. Waiting until insolvency occurs often makes recovery impossible. Monitoring and investigating suspicious related-party transactions early can safeguard company assets and strengthen any legal or regulatory action.

Insolvency and debt investigations

When a director sells assets undervalue, creditors lose, and without rigorous investigation, misconduct like this can easily go unchallenged. At ESA Risk, we ensure it doesn’t. 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 advice@esarisk.com, on +44 (0)343 515 8686 or via our contact form.

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

 

Download our Insolvency & Debt Investigations brochure

 

Inside the Insolvency Service’s 2026–2031 Investigations and Enforcement Strategy

Posted on by Caitlin Duncan

The Insolvency Service has unveiled a sweeping new five-year strategy that signals a fundamental evolution in its role from an insolvency-focused regulator to a central pillar in the UK’s fight against economic crime. 

With fraud now the most commonly reported crime in the UK, the Service’s 2026–2031 Investigations and Enforcement Strategy lays out a clear and ambitious roadmap. The strategy outlines an expanded role for the agency, including increased enforcement powers, use of data analytics and technology, and closer collaboration with other government bodies. 

From liquidations to law enforcement 

Traditionally viewed as a body focused on liquidations and disqualifications, the Insolvency Service is expanding its scope. Its new strategic priorities emphasise criminal enforcement, asset recovery, and fraud prevention, particularly in areas of systemic abuse, such as Covid-19 Bounce Back Loan Scheme fraud and the misuse of corporate entities as vehicles for laundering money. 

What’s changing? 

  • A broader investigative remit that extends beyond insolvency cases 
  • Greater use of AI and data analytics to uncover complex fraud 
  • Stronger ties with enforcement partners like NATIS, CPS, HMRC, and Companies House 
  • A clear mandate to recover proceeds of crime, including from crypto-assets 

The numbers behind the strategy 

The strategy follows a period of heightened enforcement activity. In the 2024–25 financial year, the Insolvency Service: 

  • Secured 77 criminal convictions 
  • Disqualified over 1,000 company directors 
  • Achieved more than £4 million in compensation orders 
  • Delivered over £50 million in estimated economic benefit by removing bad actors from the market 

The strategy sets targets to expand enforcement activities over the next 5 years. 

Protecting market confidence 

One of the central themes of the strategy is restoring confidence in the UK’s corporate ecosystem. The Service will play a more prominent role in deterring misconduct, ensuring directors understand the consequences of non-compliance and that victims of economic crime see accountability in action. 

This aligns with the government’s broader ambitions to make the UK one of the safest places in the world to do business, especially in the wake of recent reforms at Companies House and increased scrutiny on shell companies and nominee directors. 

Tackling emerging threats 

The strategy doesn’t just address known threats; it also anticipates emerging ones. The Service is investing in expertise to handle: 

  • Cryptocurrency-linked fraud 
  • Cross-border financial crime 
  • Sophisticated abuse of government funding schemes 

With specialist teams and better intelligence-sharing frameworks, it aims to disrupt criminal networks before damage is done, moving from reactive to preventative enforcement. 

Strategic collaboration 

Perhaps most significantly, the strategy emphasises inter-agency collaboration. It recognises that no single authority can tackle complex fraud alone. The Insolvency Service will work closely with other government bodies, using shared data, joint investigations, and aligned enforcement tactics to deliver faster, more effective outcomes. 

Looking ahead 

As someone who’s worked in risk management and investigations for over 3 decades, I see the 2026–2031 Investigations and Enforcement Strategy as a major turning point in the UK’s approach to corporate oversight.  

For risk professionals, compliance leaders, and directors, the implications are clear: regulators will expect more transparency, better governance, and faster responses to warning signs of misconduct.  

This introduces both challenges and opportunities; increased scrutiny, a more aggressive enforcement posture, and expanded data surveillance mean businesses must take internal controls more seriously than ever. At the same time, the strategy promises a fairer marketplace, where those who follow the rules are no longer undercut by fraudsters operating with impunity. 

At ESA Risk, we’ll be tracking how this strategy plays out in practice, how cases are investigated, which industries come under the spotlight, and what risk professionals can do to stay ahead. 

Fraud investigations by ESA Risk 

If you suspect that a fraud has occurred within your business and need advice or support on the next steps, we’re here to help. 

Contact us at advice@esarisk.com, on +44 (0)343 515 8686 or via our contact form to find out more. 

 

Bounce Back Loans: October – December 2024 roundup

Posted on by Caitlin Duncan

Our coverage continues on the Insolvency Service’s initiative to uncover financial wrongdoing connected to the Covid-19 Bounce Back Loan Scheme (BBLS), amid sustained efforts to identify businesses and individuals who exploited the scheme intended solely for vulnerable businesses during the pandemic.

With 6 further cases of BBLS-related fraud reported in the last 3 months, and a positive conclusion to a previously reported case.

Bounce Back recap

In January of 2023, we reported on the director of Digital Business Box Ltd, who fraudulently secured a £50,000 Covid Bounce Back Loan by exaggerating his company’s turnover. After spending the loan on personal expenses and a BMW, then attempting to dissolve his business, he received a suspended prison sentence and a director ban in December 2022.

After his conviction, the Insolvency Service initiated crime proceedings, compelling Mr Saeed to sell his BMW and his flat in east London to repay the £50,000 loan. The sale of Mr Saeed’s property was completed in late October 2024, along with an additional payment, ensuring the full repayment of the loan.

Bankruptcies and bans

Shaun David Dixon, a self-employed electrician from Middlesbrough, faces 7 years of stringent bankruptcy restrictions following his abuse of the Covid Bounce Back Loan scheme.

He improperly claimed 2 separate loans totalling £23,750 by overstating his business turnover, receiving an unentitled excess of £16,250.

Made bankrupt in November 2023, Mr Dixon did not dispute the inaccurate information provided during his second loan application, leading to bankruptcy restrictions that prevent him from acting as a company director and borrowing over £500 without declaring his bankruptcy status. These restrictions are set to last until October 2031 to prevent further misuse and protect public funds.

Ruxanda Guja, a former decorator in Romford, has been banned from acting as a company director until December 2037 and must pay over £100,000 in compensation after unlawfully securing 3 Covid Bounce Back Loans totalling £145,000 for her company, Roxy Contracts Limited.

Despite the rules stating businesses were entitled to a single loan of up to £50,000 depending on their turnover, Ms Guja applied for 3 separate loans in 2020, obtaining 1 of £45,000 and 2 others of £50,000 each from different banks by misrepresenting her company’s turnover.

She has been ordered to pay £107,038 in compensation and £7,592 in costs. The Insolvency Service conducted the investigation, emphasising that Ms Guja’s actions breached clear scheme guidelines, constituting misuse of taxpayer money. Liquidators were appointed for Roxy Contracts in June 2021.

Nazia Khan, a Dubai-based sales consultant, received a 9-year company director ban in the UK for fraudulently securing a £25,000 Bounce Back Loan for her dormant company, LC247 Limited, by falsely claiming a turnover of £100,000.

The Insolvency Service’s investigation found that the company, which was supposed to offer consultancy services for a variety of luxury items and consumer goods, had minimal trading activity and was not entitled to the funds. Ms Khan misused the loan for personal expenses, including rent and shopping, rather than business development. The company was liquidated in February 2022, with over £28,000 in debts.

Her disqualification began on 5th December 2024, preventing her from any management role in a UK company without court permission.

Kieron Minto-St.Aimie, a former professional footballer, has been disqualified from serving as a company director for 8 years for making a false declaration to secure a £25,000 Covid Bounce Back Loan for his business, when it was eligible for much less.

His sports academy in Brent was entitled to only £10,000 based on its actual turnover, but he overstated the figure by £60,000. The academy, which provided football coaching and mentoring, opened in 2016 and was dissolved in January 2023.

Suspended sentences

Muhammadh Chaudhry, a Surrey director who used to be known as Masood Jamati, has been handed a suspended sentence and a 7.5-year director disqualification after fraudulently securing £100,000 in Covid Bounce Back Loans.

He applied for these loans for 2 businesses that seemingly never traded, using “cynically invented” turnover figures of £200,000 for each to obtain the maximum loan amount. After receiving the loans, Mr Chaudhry transferred the funds through family members’ bank accounts and then back to himself, using some for personal expenses like holidays to Pakistan.

While Mr Chaudhry has repaid 1 loan in full and has started to pay back the second loan – agreeing to repay the remaining balance – his actions were deemed a deliberate exploitation of a scheme intended to support legitimate businesses during the pandemic.

Irena Tokarczyk, a director from Watford, was sentenced to a suspended 2-year prison term for fraudulently acquiring a £50,000 Bounce Back Loan and subsequently dissolving her company, Good Food Shops Ltd, without repaying the loan. The company was dissolved in October 2020, triggering an Insolvency Service investigation, which found that the company had never traded.

In addition to the suspended sentence, Ms Tokarczyk must perform 100 hours of unpaid work, undergo 10 days of rehabilitation activity, and is disqualified from directing a company for 3 years.

She breached the Companies Act 2006 by not informing creditors about the dissolution and committed fraud. The Insolvency Service plans to recover the funds through a Proceeds of Crime Confiscation Order, which will be evaluated in court this month.

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)343 515 8686 or via our contact form.

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

Download your copy

Bounce Back Loans: July – September 2024

Posted on by Caitlin Duncan

We’re continuing our reporting on The Insolvency Service’s ongoing efforts to identify financial misconduct linked to the Covid-19 Bounce Back Loan Scheme, as attempts to crack down on businesses and individuals who abused the scheme across the country continue.

The last 3 months have seen 10 further cases reported, with key action taken against those who misused government financial aid, including both the Bounce Back Loan Scheme (BBLS) and the Eat Out to Help Out scheme.

Suspended sentences

A Bristol-based builder and his father were handed substantial suspended sentences for jointly defrauding £100,000 in Covid-related financial aid for 2 construction firms that were not trading at the beginning of the pandemic. The duo, found guilty of concocting fake claims, were sentenced to 2 years suspended for 18 months, and 16 months suspended for 12 months, respectively.

In another notable family-linked fraud case, the Deegan’s, a father and daughter from Merseyside, were convicted after their plot to exploit Covid loan provisions came to light.

Of the £50,000 and £25,000 they were entitled to for their 2 companies – long-running family business Bootle Car and Commercial, and the almost identically named Bootle Cars & Commercials, set up in February 2020 – Catherine Deegan fraudulently claimed a further £15,000 2 weeks after the initial loan via a different bank. Gerard Deegan later applied for an additional £50,000 in June 2020; despite knowing (and later admitting) his business was not entitled to it.

Their collaborative efforts to deceive financial authorities ended with both receiving suspended sentences. Mr Deegan has also been disqualified as a company director for 10 years and placed on an electronically monitored curfew.

Business consultant, Mr Mushtaq, fraudulently applied for and secured 2 maximum-value Bounce Back Loans on consecutive days in early June 2020. The funds, intended for business relief, were instead diverted for personal luxury expenditures, with “£78,000 sent to a money transfer service based in California”, the Insolvency Service reports.

Appearing at Derby Crown Court on 13th August, Mr Mushtaq was sentenced to 20 months in prison, suspended for 22 months, and ordered to complete 120 hours of unpaid work.

Stanislav Genadiev, an electrician from Romford, has been ordered to repay over £56,000 after fraudulently securing £100,000 through 2 Covid Bounce Back Loans. He misused the funds for personal debts, groceries, and designer clothing instead of his 2 businesses, as the loan was intended.

Both loans were obtained through false claims regarding the turnover of his companies in 2020. Mr Genadiev must repay the amount within 3 months or face 18 months in jail, though he will still owe the money if imprisoned.

Mr Genadiev was previously sentenced to a 2-year suspended prison term and 150 hours of unpaid work. Further asset recovery actions by the Insolvency Service are possible if additional assets are discovered.

Lee Walkey, a Sussex-based company director, was not only sentenced for Bounce Back Loan fraud but was also found to be involved in a phoney investment proposal. After securing £50,000 from the BBLS, Mr Walkey “misused £21,756 of the loan”, transferring this money into personal accounts.

Continuing his unlawful behaviour, Mr Walkley later encouraged someone he knew to invest more than £7,000 in a proposed footgolf course, promising 20% control and a return on his investment at a future date. Crawley Borough Council later confirmed he never had permission to create the footgolf course to begin with.

Mr Walkley was handed an 8-month prison sentence, suspended for 12 months, and ordered to complete 150 hours of unpaid work.

Bankruptcies and bans

Further to suspended sentences, many individuals faced hefty directorship bans and tough bankruptcy restrictions.

A significant case involved Matthew Littlechild, a business owner in Devon who faced legal action after misusing £250,000 in Covid loans.

Mr Littlechild claimed 5 separate £50,000 Bounce Back Loans for his businesses between May and June 2020, despite this, Mr Littlechild became bankrupt in January 2024. Investigations into his bankruptcy found he’d provided false information on the turnover of all his businesses, resulting in 13 years of stringent bankruptcy restrictions, preventing him from acting as a company director or borrowing more than £500 without first declaring the sanctions.

Potential asset realisations are still being reviewed by the Official Receiver.

London taxi driver, Mr Ahmad, has been slapped with an 11-year sanction after falsely claiming 2 loans on the Bounce Back Loan Scheme, totalling £100,000, then failing to use the money for the economic support of his businesses as intended.

Mr Ahmad was made bankrupt in February 2024, after investigations by the official receiver found he had overstated the turnover of his 2 businesses, to claim more money than was allowed under the scheme.

Nick Addison, a construction contractor from Bedfordshire received a directorial ban after misallocating a £50,000 loan meant for business overheads. Addison claimed a turnover of £250,000 for his business Addison’s Quality Ltd, but investigations showed the actual earnings weren’t even a quarter of his stated claim, culminating in a ban from holding any directorial position until 2037.

It was stated that “between May and September 2020, more than £48,000 was paid to Mr Addison’s personal account” from his company’s account, highlighting the significant financial discrepancies.

The maximum directorship ban of 15 years has been handed to the sole director of a data processing and equipment sourcing business. Richard Oliver, director of Exact Data Trading Co. Ltd, inflated his company’s turnover to secure a £50,000 Bounce Back Loan in June 2020. It was also discovered that no trading income was paid into the business’s account between March and July of that year, indicating the business was not operating at the start of lockdown.

Between June and July 2020, Mr Oliver provided false and contradictory information to councils and registered for business rates to receive Small Business Relief Grants through 21 local authorities, despite not occupying or trading from any of the addresses he registered.  He received grant payments of £95,000 from 7 of these local authorities off the back of these applications.

Finally, Belal Ahmed, owner of Bengal Tandoori Lichfield Limited, has been banned from company directorship after abusing both the Covid Bounce Back Loan and Eat Out to Help Out schemes.

Mr Ahmed submitted claims totalling £56,500 under the Eat Out to Help Out scheme, a programme subsidised by the government, where customers received 50% off food and non-alcoholic drinks during certain days of the week at participating restaurants and cafes.

The analysis of the restaurant’s bank statements revealed that their in-house restaurant sales for a particular month were only £8,055, however, the company obtained “at least £48,445 more than it was entitled to”.

Mr Ahmed had previously, and fraudulently, attained a Bounce Back Loan earlier that year by inflating his turnover.

Winding up

The Insolvency Service has shut down Ledbridge Consultants Limited and Montague Partners Ltd after investigations proved that both companies fraudulently received over £1 million in Covid support loans without entitlement. Registered in Birmingham and London, respectively, neither company genuinely traded but instead acted as vessels to illicitly obtain substantial funds.

They initially obtained 2 maximum loan amounts via the Bounce Back Loan scheme and a further £1.5 million from the Future Fund – another government Covid support scheme – in the name of 3 other companies, quickly distributing these funds to 35 individuals. 10 of these beneficiaries received more than £75,000 each, spread out over multiple small transactions in a short period of time.

The ongoing investigation revealed they had also stolen identities, providing the details of previous job applicants to falsely set up company structures and financials without consent.

Both companies failed to cooperate with the Insolvency Service, leaving the exact control and intentions behind these significant transactions unclear. Consequently, both companies have been wound up at the High Court, and the Official Receiver has been appointed as liquidator.

A Lincolnshire-based eel protection company was shut down after investigations revealed egregious misuse of Covid-19 financial support. The directors of The Eel Screen Company Ltd submitted inaccurate revenue figures to obtain a £50,000 bounce back loan in 2020, and subsequently engaged in additional misconduct with a £225,000 application for the Recovery Loan Scheme in January 2022.

Purportedly, the company was involved in the installation of screens to protect eels in rivers, though the directors provided conflicting information on the nature of the business when questioned during the investigation.

The Insolvency Service found inconsistencies in the company’s accounts, in addition to bank statements that appeared doctored.

It was later revealed that “of the £225,000 The Eel Screen Company received, £148,000 was withdrawn as cash”, directors also failed to produce accounting records on request.  As of today, only 1 repayment has been made, with £213,750 and £30,726 in interest outstanding.

David Hope, Chief Investigator at the Insolvency Service, said: “The Insolvency Service will not hesitate to apply to have companies wound-up in the public interest in such cases.”

As investigations continue, businesses and individuals alike face the consequences of their actions during the pandemic; a stern reminder that the misuse of government aid is a serious offence with significant penalties.

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)343 515 8686 or via our contact form.

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

 

Download your copy

Bounce Back Loans: May 2024 news roundup

Posted on by Admin Admin

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).

May 2024 was a particularly busy month, with 7 separate updates from the Insolvency Service on the topic of Bounce Back Loans.

Suspended sentences

Several individuals have received suspended sentences for misusing the Bounce Back Loan Scheme.

Sehrish Yasmin, a restaurant manager in London, was given a suspended sentence after using £12,000 of Bounce Back Loan money to purchase jewellery instead of supporting her business. The £12,000 was taken from 2 £50,000 loans obtained by Ms Yasmin, despite companies only being eligible for a single loan under the scheme. Moreover, Ms Yasmin failed to deliver records to the liquidator when her company was liquidated in May 2021.

Another case involved a cleaner, Anna Dalecka, also based in London, who received a suspended sentence for abusing the loan scheme. Ms Dalecka “wildly overstated her takings by £216,000” in claiming the maximum £50,000 loan.

Sheffield-based James Todd was sentenced after spending a fraudulently obtained loan for a non-existent business on a BMW, among other personal expenditure. Mr Todd obtained a £50,000 loan for Pro Detailing, a business he invented – along with its £255,000 turnover – for the purpose of applying for a Bounce Back Loan. He spent £49,755 of the loan funds “on personal purposes” in less than a month.

Similarly, Rian O’Keeffe of Hammersmith, London used a fictitious business to acquire his £50,000 Bounce Back Loan. Mr O’Keeffe invented a £312,000 turnover for ‘Trainersource’ when applying for the loan. He withdrew £22,000 in cash and spent the loan money “on general living expenses”, eventually being declared bankrupt in November 2021.

Ms Yasmin was handed a 10-month prison sentence, suspended for 12 months, at Manchester Crown Court on 16th May 2024. She has since repaid both loans in full and has been ordered to pay £5,000 in compensation and costs.

Ms Dalecka was sentenced to 18 months in prison, suspended for 24 months, on 3rd May 2024 at Snaresbrook Crown Court. She was also ordered to complete 300 hours of unpaid work and was handed a 3-month curfew.

Mr Todd was also sentenced to 18 months in prison, suspended for 24 months. His sentencing took place at Sheffield Crown Court on 20th May 2024. Mr Tood must complete 240 hours of unpaid work and pay £2,000 in compensation.

Mr O’Keeffe was also given an 18-month prison sentence, suspended for 2 years, at Southwark Crown Court. He is subject to a 3-month curfew and 30 days of rehabilitation activity.

All 4 have been handed lengthy directorship bans in addition to their suspended sentences.

These cases highlight the severe consequences individuals faced for misusing the emergency loans, even if the sentences were suspended.

Directorship bans

While the suspended sentences handed out in May’s reported cases represent the most stringent punishments, other abusers of the Bounce Back Loan Scheme were given directorship bans.

A husband and wife estate agency team from Cornwall were disqualified from directorships for 6 and 5 years, respectively, after acquiring a £50,000 Bounce Back Loan using a false turnover figure and then using the money for personal gain instead of business purposes.

Another notable case involved a London-based builder who received a 10-year ban for obtaining a £50,000 Bounce Back Loan through fraudulent means and failing to provide proof of how the funds were used.

A greengrocer from London was disqualified for 7 years and told to pay over £37,000 in compensation for using £19,000 of the £35,000 Bounce Back Loan he acquired to invest on the stock market. Emra Kayam dissolved his business in November 2020 with the full value of the loan still outstanding.

Ongoing investigations

May’s flurry of updates is a reminder that, while many cases of Bounce Back Loan fraud have been prosecuted, there are ongoing investigations into suspected misuse of the scheme. In relation to the husband and wife estate agency business, Chief Investigator at the Insolvency Service, Kevin Read said: “Tackling abuse of the Bounce Back Loan scheme is a key priority for the Insolvency Service.”

Similarly, Lawrence Zussman, Deputy Head of Company Investigations at the Insolvency Services said (in relation to a different case): “[This] lengthy ban shows the Insolvency Service will pursue those who seek to abuse taxpayers’ money and remove them from the business arena.”

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)343 515 8686 or via our contact form.

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

 

Download your copy

What legal action can a creditor take against a business?

Posted on by Caitlin Duncan

By guest author Sharon McDougall of Scotland Debt Solutions.

Creditors have a range of legal actions available to them if they have unsuccessfully attempted to recover their debts from a business. Reminder letters and warnings are typically sent initially but, if these are ignored and the debt remains unpaid, legal action may follow.

So, what is likely to be the first step in recovering their money through the courts and how serious can these actions be for a business?

County Court Summons

A County Court Summons is an official demand for payment of a debt and the business has 14 days in which to respond. They might pay the debt, negotiate a payment plan, or challenge the legitimacy of the claim. If the Summons is ignored or payment is not made, the court can issue a County Court Judgment (CCJ) against the business.

County Court Judgment

There is still time for the business to pay the debt or arrange a payment plan, even if a County Court Judgment (CCJ) has been made. The CCJ allows 30 days for the debtor to meet the court’s demands before it is registered with the credit reference agencies.

Once the CCJ is officially registered it remains on the business’s credit file for six years and can severely hinder its ability to obtain borrowing. Importantly, it also provides formal proof of insolvency if a creditor wants to forcibly close down the business.

Notice of Enforcement

A creditor can send a Notice of Enforcement when a County Court Judgment is not paid. This means that a bailiff visit will take place to the business premises with a view to seizing business assets to the value of the debt.

The business can still arrange a payment plan with the bailiff if they sign a Controlled Goods Agreement. This allows the bailiff to return and seize the goods if the business does not maintain the repayments.

Statutory Demand for Payment

Creditors can also send a statutory demand if a County Court Judgment is not paid. This is the precursor to one of the most serious types of legal action that can be taken against a business for non-payment of a debt.

If the business does not challenge the statutory demand within 18 days or pay the debt within 21 days, their creditor can present a winding-up petition to the court. This allows the business a further seven days to pay the debt.

Winding-up petition

Seven days after the winding-up petition is presented a notice is placed in the Gazette and the business’s financial situation becomes public knowledge. The bank then freezes the company’s accounts, effectively rendering the business inoperable without court approval for certain transactions.

If the court ultimately grants a winding up order against the business it will enter liquidation and be forced to close down. A further consideration for the company’s directors is the investigation that takes place into their conduct leading up to insolvency.

Financial instability and unpaid debt

The combination of carrying unpaid debt and long-term financial instability can prove fatal for some businesses given that their creditors have access to such effective debt recovery and enforcement measures.

When a business is financially unstable it risks serious legal actions from its creditors and can quickly be forced into liquidation in some cases, especially if a high-value debt is involved.

The risks of financial decline are severe for businesses, but they can protect themselves from financial decline by carefully monitoring their cash flow against cash needs and acting quickly to deal with any upcoming cash shortages.

Article written by Sharon McDougall of Scotland Debt Solutions, part of Begbies Traynor Group. Their team specialises in helping Scottish companies deal with debt, has extensive experience of Creditors’ Voluntary Liquidation, and can help establish whether CVL is the best option, or whether other choices are available.

Instruct ESA Risk today

If you’re looking for an experienced company to reliably serve documents, such as statutory demands and winding-up petitions, look no further than ESA Risk. Our extensive network of process servers covers the whole of the UK (as well as overseas locations).

Whether you require us to serve relatively straightforward, standard documents or to organise complex time-synchronised, multi-location services, either in the UK or overseas, we’ll work with you to understand your specific requirements and tailor our services and fees accordingly.

Need to confirm an address before sending documents? We also provide tracing services, ensuring you serve the right people in the right place at the right time.

Email us at process.serving@esarisk.com, or call us on +44 (0)343 515 8686 and select option 2.

Bounce Back Loans: September 2023 news roundup

Posted on by Admin Admin

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).

While there was only one such update in September from the Insolvency Service last month, there was an important statistical update from the Department for Business & Trade with one statistic, in particular, widely reported by the press…

Marked increase in Bounce Back Loans flagged as suspected fraud

In the ‘Covid-19 loan guarantee schemes performance data‘ quarterly update to the end of June 2023, published by the Department for Business & Trade, the value of BBLS loans “flagged by lenders as suspected fraud” rose to £1.65 billion – a near 40% increase since the March 2023 update.

The official commentary on the statistics states: “Since fraudulent loans are likely to be among the first to default, it is assumed that the proportion of guarantee claims linked to loans with a suspected fraud flag should decline as the scheme matures, although this will only become apparent over time.”

As we have seen from the number of Bounce Back Loan Scheme fraud cases discussed on this website over the past couple of years, the scheme was open to fraudulent activity, as lenders were encouraged to provide businesses with financing as quickly as possible.

The loans handed out under the scheme were, of course, 100% guaranteed by the UK government and the public purse has so far paid out on £1.27bn of loans with a suspected fraud flag (around 18% of the total paid out so far under the BBLS guarantee scheme).

The data release from the Department of Business & Trade (formerly the Department for Business, Energy & Industrial Strategy) includes a set of notes specifically relating to suspected fraud reporting, which admits that the “figures for suspected fraud will vary from quarter to quarter” as lenders evolve their “processes for identifying and combatting fraud”. The release also notes that a flag of suspected fraud will not always mean actual fraud, and that reporting will differ by lender depending on their “fraud tolerance thresholds”. The general message is that the figures for this metric are “indicative” as at a moment in time.

First Bounce Back Loan compensation order secured in court

The Insolvency Service has secured its first compensation order in court, which orders Marian Ghimpu to repay £52,163 for his abuse of the Bounce Back Loan Scheme.

Ghimpu, from Croydon, obtained the maximum £50,000 Bounce Back Loan in October 2020 after he claimed his company’s turnover was £200,000 in his application. In fact, his company, Deea Construct Ltd, was only eligible for the minimum loan amount of £2,000. There was no activity at all for the year to October 2020 in the company’s bank accounts, and only around £4,000 in revenue in summer 2019 (which fell in the qualifying period for the loan application).

On receiving the loan funds, Ghimpu transferred more than £40,000 to his personal bank accounts and withdrew the remaining money in cash.

Just six months after acquiring the loan, the director placed Deea Construct Ltd into liquidation, which in turn led to an Insolvency Service investigation. The company’s liquidator, from Capital Books, was unable to recover the loan money. As a result, the Insolvency Service sought a compensation order, which was imposed on Ghimpu by Chief ICC Judge Briggs at High Court of Justice, Rolls Building on 25th July 2023 (but only reported by the Insolvency Service on 1st September 2023).

Ghimpu also received a thirteen-year director disqualification order.

Nina Cassar, Deputy Head of Investigations at the Insolvency Service, said: “Marian Ghimpu’s actions, providing false information to the bank, allowed Deea Construct Ltd, and himself, to have an unfair advantage over other businesses impacted by Covid-19. Abuse of taxpayers’ money will not be tolerated and I am delighted we have secured this compensation order. Where there have been similar cases of abuse by company director, we will be seeking further compensation orders and disqualifications.”

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)343 515 8686 or via our contact form.

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

 

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The future of insolvency regulation – government publishes consultation outcome

Posted on by Admin Admin

The UK government has, this week, published its plans to reform insolvency regulation, based on the results of a public consultation held under the banner of ‘The future of insolvency regulation’ which ended in March last year.

It will come as no surprise that the plans focus on increasing regulation within the sector.

The headline reform addresses the current absence of regulation for firms offering insolvency services – at present, only individual insolvency practitioners are subject to regulation.

Additionally, a central public register will be created, listing all those authorised to provide insolvency services – both individuals and firms. The register will include notice of any sanctions brought by regulators against those on the list.

Respondents to the consultation were “overwhelmingly supportive” of the proposals. This was reflected in the thoughts of the insolvency practitioners I spoke to when the plans were published earlier in the week.

Colin Wilson, Partner at Opus, told me that “the move to regulating firms as well as individual insolvency practitioners will be a positive change, which should improve professional standards, just as the creation of a public register of insolvency practitioners and firms will increase transparency.”

Similarly, Rehan Ahmed, Managing Director at Quantuma, called the public register “a great idea” which “will give clarity and confidence to the general public that who they are seeking advice from is a bona fide practice.”

Existing insolvency regulators to stay in place

Another proposed change mooted at the start of the public consultation was the creation of a single regulator for insolvency practitioners to replace the role of the four recognised professional bodies that currently cover the sector (as we reported on in January 2022).

Plans for a new central regulator have been dropped, however. Instead, the government will “challeng[e] the current four professional body regulators to deliver significant and measurable improvements to the quality of regulation through non-legislative means, whilst keeping options to replace the current regulatory model with a single regulator of insolvency practitioners under review”.

The government has said it will provide the four bodies – Institute of Chartered Accountants in England and Wales (ICAEW), Insolvency Practitioners Association (IPA), Institute of Chartered Accountants of Scotland (ICAS) and Chartered Accountants Ireland (CAI) – “with additional tools” and “work with [them] to deliver transformational improvements to the regulatory framework without the need for legislation”.

On the development of regulations within the existing regulatory bodies, Rehan Ahmed said: “Whilst the industry is already heavily regulated and most do a fabulous job, it is great to see there is a proposal to scrutinise insolvency practices and make them more accountable. It suggests that any regulations may be akin to those of the Law Society whereby, if a practice is failing to provide the right level of service, the relevant body will intervene.”

Further insolvency regulation reforms

The government’s response to the consultation also includes plans to:

  • “Reform… the way ethical and professional standards for the profession are set”.
  • “Develop… and consult… on proposals to introduce a compensation/redress scheme for those affected by an insolvency practitioner’s acts or omissions”.
  • “Strengthen… the bonding framework, which requires insolvency practitioners to hold security in the event of their fraud or dishonesty”.

On this final point, Colin Wilson added: “The proposal to reform the current bonding regime is also welcome, but it is important that the government provides more details without delay to demonstrate how any new system will work in practice.”

Although this week’s announcement has come nearly eighteen months after the public consultation ended, the reforms are still only plans, which the government says it “will take forwards when parliamentary time allows.”

Get support from ESA Risk

Insolvency investigations

When you suspect fraud or believe that a company director or third party is not being honest, we understand how difficult and time-consuming the investigations process can be. Our investigative services are designed to provide you with the whole picture allowing you to concentrate on the more technical insolvency issues. From intelligence gathering and tracing, to on-site support including digital data capture and forensics, ESA Risk has the investigations side of your insolvency case covered.

Support for company owners and directors

If you have a limited company that you wish to close, we can introduce you to an insolvency practitioner, who will ensure the correct legal process is followed.

If you suspect that a fraud has occurred within your business and need advice or support on the next steps, we’re here to help.

Contact us

Contact Mike Wright, Risk Management & Investigations Consultant, at mike.wright@esarisk.com, on +44 (0)343 515 8686 or via our contact form, to find out more.

 

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Bounce Back Loans: August 2023 news roundup

Posted on by Admin Admin

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).

The frequency of updates on the subject from the Insolvency Service certainly appears to have slowed, recently. (In fact, there were none at all in July.) However, the cases being reported now are interesting in that the errant company owners are being penalised with more than only director disqualification in more and more instances.

Custodial sentence for Bounce Back Loan Scheme fraud

35-year-old Aleksander Staskiewicz has been sentenced to eight months in prison for offences under the Fraud Act 2006 and the Companies Act 2006 related to the Bounce Back Loan Scheme (BBLS).

The Southampton-based plumber successfully applied for a Bounce Back Loan for his company Think Gas Ltd in May 2020, early in the Covid-19 pandemic.

The Polish national’s company was already facing financial challenges before the pandemic began, though. Staskiewicz “had considered closing it down.” This fact alone meant Think Gas Ltd should not have been eligible for the scheme.

As we have seen in so many other BBLS cases, the director inflated the company’s turnover when applying through the scheme and obtained a £20,000 loan.

Staskiewicz withdrew nearly all of the money a day after the loan reached the company’s bank account. And a day later, he completed a striking-off application to dissolve Think Gas Ltd.

Dissolving a company without informing creditors within seven days is a criminal offence. In this case, Staskiewicz did not inform the bank that provided him with the Bounce Back Loan.

Staskiewicz was sentenced at Southampton Crown Court on 17th August 2023, having pleaded guilty at a hearing on 20th July 2023 to fraud by misrepresentation contrary to sections 1 and 2 of the Fraud Act 2006 and failure to notify creditor of a strike off application contrary to section 1006 of the Companies Act 2006. He was handed an eight-month sentence for both offences, to be served concurrently.

Peter Fulham – Chief Investigator of the Criminal Investigation Team at the Insolvency Service, said: “Aleksander Staskiewicz thought he could abuse the rules to exploit a scheme, backed by taxpayers, specifically designed to help businesses get through the pandemic. He now has a criminal conviction as a consequence of his actions. We will not hesitate to prosecute such cases.”

In court, Staskiewicz said “he had hoped to repay the loan…within twelve months”, but the money was still outstanding after three years.

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Suspended sentence plus curfew

In another case involving the dissolution of a company after securing a Bounce Back Loan, Ivan Hristov Fratev was given a two-year suspended prison sentence, a four-month electronically tagged curfew from 19.00 to 7.00 each night, a six-year director disqualification and fifteen days rehabilitation activity requirement at Snaresbrook Crown Court.

The Bulgarian national ran a construction, security and extermination business, BI&F Ltd, in Chingford, London. Fratev obtained a £50,000 Bounce Back Loan (the maximum amount under the scheme) in May 2020.

Using powers granted in December 2021 to investigate directors of dissolved companies, the Insolvency Service found that Fratev moved to dissolve his company less than a fortnight after receiving the loan money. He did not inform the bank that provided the loan.

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Exaggerated turnovers

Two cases of exaggerated turnovers to secure Bounce Back Loans, now, that were uncovered due to the companies involved entering liquidation.

Ryan Moir, an Eastbourne-based builder, took out the maximum £50,000 Bounce Back Loan in May 2020 through his company Croxton Group Ltd.

In order to obtain the maximum loan amount, Moir claimed that the company’s turnover was £250,000 for the relevant period. Insolvency Service investigators found that Croxton Group Ltd’s actual turnover was under £21,000 – less than 10% of the figure Moir used in the loan application.

Moir’s company went into liquidation owing more than £184,000 in May 2022, including the majority of the loan (£49,400). Croxton Group Ltd’s liquidators, from FRP Advisory, “are taking action to recover the money.”

Separately, Bradley Malone also obtained a £50,000 loan through the Bounce Back Loan Scheme in June 2020. Malone recorded the turnover of his company – ONENETPRINT Ltd – as £200,000 (the amount needed to claim the maximum loan value).

The company’s actual turnover was around £90,000 – less than half that stated by Malone – the Insolvency Service found, once the company had gone into liquidation in February 2022 with the full loan amount still outstanding.

Both Malone and Moir have received ten-year director bans.

Interestingly, Malone claimed that all he had done through the Bounce Back Loan application process was “clicked ‘next’ on his phone, and the money arrived within the hour.” This perception by some directors of the Bounce Back Loan Scheme as providing easy money with few or no checks goes some way to explaining the issues being uncovered now, as companies are dissolved or enter insolvency.

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)343 515 8686 or via our contact form.

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

 

Download your copy
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