The Governments response to assisting businesses continue to trade during the effects of Covid were wide reaching. The "Bounce Back Loan" was a life saver for some entities but inevitably subject to abuse.
Two different companies have been wound up in the High Court for providing false documentation enabling them to access the Bounce Back Loan scheme, a collective sum of £230,000.00. The Insolvency Service conducted enquiries into the falsified documents and discovered that neither entity had traded. One entity claimed to be supplies of PPE and the second entity stated it provided medical care products. Despite extra staff and vigilance, various loans were granted and later discovered to be fraudulent.
Companies that abuse Government COVID-19 loan related schemes through fraud will now face a Winding Up Petition from the Insolvency Service.
To aid the recovery of Bounce Back Loans, the Insolvency Service could shortly be in receipt of additional powers if The Ratings (Coronavirus) and Directions Disqualifications (Dissolved Companies) Bill is passed by Parliament. Not only will this allow powers of investigation but also retrospective power to investigate the conduct of Directors of dissolved companies.
Predictions are the Insolvency Service may be busy in the third and fourth quarter of 2021/22 with insolvency set to rise as the UK emerges from the quickly enacted legislation brought in to assist with the pandemic. The Corporate Insolvency and Governance Act 2020 restrictions will mostly be lifted on 30 September 2021. It is important to be aware of the pitfalls which may still await if a Company is dissolved, or if a director resigns office.
Early legal advice should be sought both from those entities facing an uncertain future and also those entities who remain solvent but are affected by its customers seeking to enter a scheme of insolvency and protection from creditors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.