Two directors owning four companies between them have been prosecuted by the Insolvency Service for obtaining Bounce Back loans under false pretences.. The first gentleman opened three companies and took out a Bounce Back loan of £50,000 for each company and then placed them into voluntary liquidation in the autumn of last year.
These liquidations prompted an investigation by the Insolvency Service who found that the director had made cash withdraws from each of the companies’ bank accounts totalling more than £24,000 and then transferred the remainder of the loans to companies controlled by a close friend.
The close friend in question opened a bank account for a new company in June 2020 and immediately took out a £50,000 Bounce Back loan. He used the funds to purchase a Rolex watch, drew more than £8,400 in cash from the company bank account and transferred £12,500 to other parties. The Insolvency Service’s investigation found there was no evidence that the loans had been used for the benefit of the businesses and that the companies in question had in fact never traded.
As a result, the first gentleman has been issued with a 13 year ban and the second with a six year ban which means that either of them cannot directly or indirectly be involved in the formation or management of a company without permission of the Court.
These are extreme cases but give a clear indication that the Government services will look into insolvencies where Bounce Back loans have been taken out.