Indeed, as was also explained, the Insolvency Service has successfully petitioned the Courts to wind up five companies that have been involved in abusing COVID-19 Government loans.
The blog continued to explain how under new proposed legislation, the actions of Directors who may have dissolved a company in order to avoid investigation as part of the liquidation procedure, can now come under the spotlight. With an anticipated rise in companies dissolving as a result of the pandemic, it is important to be aware of the pitfalls which may still await if a company is dissolved, or if a Director resigns.
Further Insolvency Service investigated COVID-19 loan fraud
A 10 August 2021 Insolvency Service press release entitled “Fraudulent companies shut down after abusing COVID loan support” highlights two separate companies who submitted false documents to at least 41 local authorities and the Government’s Bounce Back Loan scheme to secure grants put in place to support business during the pandemic.
Both companies ended up being wound-up by the High Court following confidential enquiries conducted by the Insolvency Service.
The press release notes that both companies egregiously provided false information in order to secure business grants and Bounce Back Loans. For example, the first company claimed that they supplied PPE and secured £95,000 worth of business grants. They also received a £50,000 bounce back loan. The second company falsely claimed to operate from a premises that turned out to be unoccupied, provided false leases and claimed to sell medical care products. All for the purpose of fraudulently securing funding that was supposed to support businesses during the pandemic.
Emphasising the tough approach, Small Business Minister Paul Schully said “This decisive enforcement action shows that we will not tolerate shameless attempts to defraud the taxpayer and falsely claim public money intended to help businesses through the pandemic”.
Reminder of potential new Insolvency Service powers
The press release reaffirms that the Insolvency Service will soon have extra powers to investigate Bounce Back Loan fraud in cases where the company has been dissolved. Therefore, the new legislation, if implemented, will give the Insolvency Service the power to investigate and disqualify Directors of dissolved companies which have previously fraudulently claimed Bounce Back Loans.
This power will be retrospective, enabling conduct that took place before the law comes into force to be investigated.
How Gherson can assist
If there are concerns over potential liability, then Gherson White-collar team can provide confidential expert advice. Please contact us to discuss your options, send us an e-mail, or alternatively, follow us on Twitter, Facebook, or LinkedIn to stay-up-to-date.