Our specialist director disqualification lawyer, Suky Mann, secured a fantastic result for a director facing director disqualification investigations after he had obtained two Government bounce back loans for the same company.
Background:
Our client, a dedicated and hard-working director in the hospitality industry, found himself in the crosshairs of the Insolvency Service after it was discovered that the company had obtained two Government-backed bounce back loans.
He faced severe allegations of unlawfully obtaining not one but two loans and allegations of misapplication of funds; the stakes were high for our client. Before this, we had not seen any successful defences against dual bounce back loan applications.
The challenge:
The Insolvency Service has taken a robust and unwavering approach to investigating alleged bounce back loan fraud, and this case was no exception. In this instance, our client faced particularly challenging allegations:
- The unlawful acquisition of two bounce back loans:Our client had obtained two bounce back loans totalling £100,000 for a single entity, an unprecedented challenge.
- Misuse of the monies: in addition, the Insolvency Service also alleged that the money he received was not utilised for the economic benefit of the company. They alleged our client had used the loan to pay off various company debts (immediately after receipt of the loans) that were, in fact, personally guaranteed by our client, thereby seemingly protecting his own position as the cost of the other creditors of the company.
Our client also faced the real prospect of the Insolvency Service pursuing a compensation order for £100,000 if the allegations could be maintained against him.
Our approach:
Suky's astute analysis of the allegations allowed her to challenge and undermine the Insolvency Service's evidence on an allegation-by-allegation basis and advance a compelling defence that ultimately caused the claim to fall away in its entirety.
When dealing with disqualification investigations, Suky ensures that the context and circumstances of such applications are thoroughly investigated, taking the time to really understand each individual director and their background.
In our client's case, Suky was able to identify where the narrative pursued by the Insolvency Service was incompatible with the factual circumstances. While on the face of it the bounce back loan application was unlawful, the Insolvency Service's case lacked the all-important context and rationale behind the director's actions. Our client wrongly, and innocently believed that the company could apply for a loan for each of the public houses operated by the company, in his mind and from an accounting point of view, he treated the two pubs as two distinct businesses.
Suky's approach was characterised by a meticulous and comprehensive examination of the evidence. She left no stone unturned in scrutinising the allegations and crafting a robust defence for our client, which highlighted that the director had in fact paid all creditors of the company simultaneously and did not prioritise personal debts above others.
Without Suky's deep dive into the director's rationale, our client's outcome would have been very different. Suky's thorough drafting and compassionate approach resulted in the Insolvency Service abandoning all areas of investigation.
Our comment
It was unfortunate that the director had to fend off such enormous and potentially devasting claims. However, this only exemplifies the importance of obtaining experienced and skilled advice as soon as correspondence is received from the Insolvency Service, even when the allegations appear insurmountable.
The client was delighted with the outcome, telling us:
"It was a pleasure to deal with Suky. From our initial meeting, everything was made very clear with excellent understanding and communication.
I was very happy with the outcome and I definitely couldn't have done it without the help from Suky. Highly recommend."
If you find yourself at the end of an investigation by the Insolvency Service, Suky is available to advise you on 01384 3273 304 and email: suky.mann@higgsllp.co.uk
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