Article courtesy of The Insolvency Service

Muhammad Arif, 57, from Uxbridge, has been made subject to 10 years of bankruptcy restrictions for claiming a £50,000 Bounce Back Loan to which he was not entitled.

Arif had run a wholesale clothing business in west London, trading as Ayesha Boutique, from April 2012 until his bankruptcy in December 2021.

In June 2020, he had applied for a Bounce Back Loan, stating that his turnover for the previous year had been £219,000.

Bounce Back Loans were a government scheme to help businesses stay afloat during the Covid-19 pandemic. Businesses could apply for loans of between £2,000 and a maximum of £50,000, up to 25% of their 2019 turnover.

However, Arif later filed a petition for bankruptcy, and was made bankrupt in December 2021 owing around £56,200, and triggering an investigation by the Insolvency Service. The investigation found that Arif’s actual turnover in 2019 was £21,604 – around 10 times less than he had claimed in the application.

Arif told investigators that around £34,200 of the £50,000 loan money was used to pay a supplier, including £19,000 for gold purchases, and around £8,900 in cash withdrawals. More than £15,500 had also gone to family members, which he said had been to repay loans.

The Official Receiver is continuing her enquiries into the payments to Arif’s family, but was unable to verify the explanation he gave to account for the remaining payments.

Under the rules of the Bounce Back Loan scheme, the money was to be used for the economic benefit of the business, but the Official Receiver was unable to determine whether any of the £50,000 loan was used to support Ayesha Boutique.

The Secretary of State for Business, Energy and Industrial Strategy accepted a Bankruptcy Restrictions Undertaking from Muhammad Arif, which runs from 11 November 2022 and lasts for 10 years.

Mitzi Mace, Official Receiver at the Insolvency Service, said:

This scheme was specifically set up to support existing viable businesses through a challenging economic period and not for individuals’ personal benefit.

Muhammad Arif’s actions have led to losses to taxpayers while he has enjoyed the benefit of £50,000 to which he was not fully entitled.

Aiden Henderson, 40, Andrew Page, 61, and Thomas Ward, 61, have all been disqualified as directors following their roles in pension mis-selling which took over £44 million from would-be investors.

The mis-selling took place between January 2014 and July 2015, initially whilst Henderson worked at Henderson Carter Associates Ltd and subsequently when Page and Ward both worked at Financial Page Ltd. Henderson and Page were both independent financial advisers, while Ward was found to have acted as a director (although he was not registered as such) at Financial Page Ltd.

Earlier this year, the Financial Conduct Authority (FCA) prohibited them from working in the financial services sector, as well as imposing fines.

They are now additionally disqualified from acting as directors of any company in any sector, without express permission from the courts.

The directors all advised clients to transfer their pensions funds into Self-Invested Personal Pensions (SIPPs), but failed to adequately explain to clients that their money was subsequently loaned to high-risk investments based in Mauritius, and therefore not subject to regulation by UK authorities.

Both firms received referrals through Hennessy Jones Ltd, which had a significant financial interest in the SIPPs, and had also designed the advice process the firms used.

Financial Page Ltd went into liquidation in July 2017 and Henderson Carter Associates Ltd went into liquidation in February 2017.

The total compensation claim made through the Financial Service Compensation Scheme was £44.1 million, although because individual claims are capped, many investors still lost significant sums.

Following a trial, 10-year Disqualification Orders were made against Andrew Page and Thomas Ward on 30 September 2022. Their bans are both effective from 21 October 2022.

On 23 November 2022, the Secretary of State accepted a 10-year disqualification undertaking from Aiden Henderson and ended legal proceedings. His ban is effective from 15 December 2022.

The disqualifications prevent them from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.

Rob Clarke, Chief Investigator at the Insolvency Service said:

Customers need to be able to have full trust in their financial advisers, and receive proper and complete information regarding the risks to their money. Yet each of these directors disregarded the individual financial and personal circumstances of their clients and turned a blind eye to blatant conflicts of interest, preferring instead to prioritise their own financial gain.

They have caused hundreds of people to lose money and failed to run their business in line with statutory obligations designed to ensure the provision of objective, independent advice, so they should not be surprised that they are now subject to lengthy bans.

(provided courtesy of The Insolvency Service)

Laszlo Szabo, 49 of London, was the sole director of Letting Base Ltd, which was incorporated in 2009 and traded as a letting agency on Holloway Road until it went into liquidation in January 2022.

In October 2020, Szabo applied for a Bounce Back Loan of £38,000 to support his business, which had formerly traded as Hungarian Lettings Ltd. The company received the loan money the following day.

Bounce Back Loans were a government scheme to help keep businesses afloat during the Covid-19 pandemic, whereby companies could apply for loans of up to 25% of their 2019 turnover, up to a maximum of £50,000.

Under the rules of the scheme, businesses could only take out one loan, although they were permitted to apply for a top-up if the original loan was less than the maximum to which they were entitled.

Yet five days after applying for the first loan, Szabo applied for another Bounce Back Loan of £50,000 for Letting Base Ltd, this time from a different bank. And 10 days after this, he applied for a £12,000 top-up to the first Bounce Back Loan, taking the total borrowed through the scheme up to £100,000.

The following day he returned to the second bank, seeking a further top-up of £50,000 to the second Bounce Back Loan. This time the application was rejected.

Letting Base Ltd went into liquidation in 2022 owing more than £243,000, including the full £100,000 of the Bounce Back Loan money, triggering an investigation by the Insolvency Service.

Investigators discovered that Szabo had made the four separate applications for Bounce Back Loans and top-ups, despite signing a declaration each time confirming it was his only application, and that Letting Base Ltd was entitled to the money he was applying for.

On 21 November 2022 the Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Laszlo Szabo after he did not dispute that he had misused the Bounce Back Loan scheme by claiming money to which his business was not entitled.

His ban lasts for 11 years and began on 12 December 2022. The disqualification prevents him from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court.

Due to Laszlo Szabo’s personal circumstances, it is unlikely that repayment of the Bounce Back Loans will be made.

Nina Cassar, Deputy Head of Investigations at the Insolvency Service, said:

The Bounce Back Loan scheme was set up to support businesses in genuine need during the COVID-19 pandemic, and the terms of the scheme were widely publicised to make clear that directors were required to self-certify their eligibility for support.

Laszlo Szabo made false declarations to his company’s banks, and then entered liquidation having made no repayments towards its Bounce Back Loans, which resulted in a loss of £100,000 of public funds.

His blatant and repeat abuse of taxpayer’s money has resulted in a lengthy disqualification, which will serve to safeguard the economy from traders who exploit financial support packages designed to help UK businesses.

(Provided courtesy of The Insolvency Service)

Brendan Michael Gaughan, 40, from Glasgow has been disqualified as a director for 12 years, after using his companies to take out Bounce Back Loans totalling £135,000 that the companies were not eligible for.

Gaughan was director of three separate property management companies, Gaughan Group Ltd, Gaughan Property Ltd, and Rentl Property Ltd. They were only incorporated in February 2020 and did no business until April 2020.

As a result, they were not eligible for funds through the Bounce Back Loan (BBL) scheme, which was available only to firms that had been doing business on 1 March 2020.

However in May 2020, Gaughan Group received a BBL of £50,000, Gaughan Property received a BBL also of £50,000, and Rentl Property Ltd received a BBL of £35,000.

Gaughan transferred all the funds into a single account and proceeded to use the money to buy a property on Warden Rd in Glasgow for over £115,000 in August 2020. He then sold the property in March 2021 for just over £120,000, and on the same day transferred £100,000 of the proceeds to his personal account.

All three companies were put into liquidation on 11 October 2021, which triggered an investigation by the Insolvency Service.

The Secretary of State accepted disqualification undertakings from Brendan Michael Gaughan, after he did not dispute that none of his companies had been eligible for Bounce Back Loans. He has been banned for 12 years, effective from 27 October 2022. He has separately agreed compensation with the Insolvency Practitioner.

The disqualification undertakings prevent him from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.

Steven McGinty, Investigation Manager at the Insolvency Service said:

Bounce Back Loans were made available for trading companies adversely affected by the pandemic. Brendan Gaughan should have known his companies weren’t entitled to the loans yet he took them anyway and used the funds for personal gain.

We will not hesitate to take action against directors who have abused Covid-19 financial support like this.

(Provided courtesy of The Insolvency Service)

John Gerard McGarvey, 37, from Rutherglen, has been disqualified as a director for 11 years after claiming two separate Bounce Back Loans totalling £100,000, and then using the money for personal benefit.

McGarvey was the sole director of CKO Civil Engineering and Surveying Limited, which was incorporated in October 2019 and ran as a surveyor’s firm based in Kirkinitlloch in Scotland until it went into liquidation in November 2021.

CKO applied for a Bounce Back Loan of £50,000 in July 2020, with McGarvey stating the company had a previous year’s turnover of £225,000.

Bounce Back Loans were government-backed loans introduced to support businesses through the pandemic. Under the rules of the scheme, companies could apply for loans of up to 25% of their 2019 turnover, allowing them to borrow from £2,000 to a maximum of £50,000, as long as the money was to be used for the economic benefit of the business.

Businesses were not allowed to apply for an additional loan unless they had originally borrowed less than the maximum amount.

But CKO applied for a second Bounce Back Loan of £50,000 just four weeks later, in August 2020. This time McGarvey applied to a different bank and stated that the business had a previous year’s turnover of £218,000.

The company struggled to survive post-Covid, and went into liquidation owing around £183,000, which triggered an Investigation by the Insolvency Service.

Investigators discovered that McGarvey had applied for two loans – which was against the rules of the scheme – and had exaggerated CKO’s turnover both times. The company’s most recent accounts showed a turnover of only around £46,400.

They also discovered that McGarvey had used the full £100,000 for his own gain, rather than to support his business.

The Secretary of State accepted a disqualification undertaking from John Gerard McGarvey after he did not dispute he caused CKO to receive two Bounce Back Loans totalling £100,000 to which the business wasn’t entitled, and then used money for his personal benefit, rather than for the economic benefit of the business.

His disqualification started on 28 October this year and lasts for 11 years.

The disqualification undertaking prevents McGarvey from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.

Steven McGinty, Investigation Manager, said:

“Not only did John McGarvey grossly exaggerate the company’s turnover to secure an initial loan, he also applied to a second bank for another loan his company wasn’t entitled to. To compound his actions, he used the money for his personal gain.

“His 11-year ban should serve as a warning that if you abuse government support, we will use our full powers to bring you to account.”

(Provided courtesy of The Insolvency Service)

Nadia Butt, from Birmingham, and Dorota Suchocka, from Barnes, South-West London are subject to 11-year and 10-year Bankruptcy Restriction Undertakings, while Heidi Carruthers is subject to a court-imposed 8-year Bankruptcy Restriction Order.

All three received their additional bankruptcy restrictions after the Official Receiver conducted separate investigations and deemed Nadia Butt, Dorota Suchocka and Heidi Carruthers a risk to future creditors.

Nadia Butt, Dorota Suchocka and Heidi Carruthers are restricted from being able to borrow more than £500 without disclosing their bankrupt status and they also cannot act as a company director without permission from the court.

Nadia Butt was made bankrupt in August 2021 and the Official Receiver was appointed as her trustee. The Official Receiver discovered that Nadia Butt wanted to start an online consultancy to help smaller businesses and secured a £50,000 Bounce Back Loan.

However, Nadia Butt was ineligible to receive a Bounce Back. She declared her anticipated turnover was £220,000, which was vastly exaggerated, and that the business had been trading on 1 March 2020, which was not true.

Further enquiries found that after Nadia Butt received the government loan, she made various payments to family members and a friend but has been unable to prove that this benefited the business.

Dorota Suchocka was self-employed mini cab driver and was made bankrupt in October 2021 before the Official Receiver was appointed her trustee.

The Official Receiver found that in October 2019, Dorota Suchocka successfully applied for three loans worth £75,000.

However, each application included false details. Dorota Suchocka used a fake employer and inflated her income as being four times higher than what she earned as a mini cab driver. The monthly repayments for the three loans were more than Dorota Suchocka’s average monthly earnings.

And Heidi Carruthers was made bankrupt in February 2021 and was unemployed at the time the Official Receiver was appointed her trustee.

The Official Receiver’s enquiries uncovered that in September 2018 Heidi Carruthers used a third party’s name to secure just under £34,000 to buy a car on finance before selling the vehicle to someone who was unaware she didn’t own the car outright.

At the time Heidi Carruthers secured the loan she was insolvent and couldn’t make the payments as she had three unpaid County Court Judgements and her only income was through benefits.

Heidi Carruthers refused to co-operate with the Official Receiver and this resulted in the court imposing her 8-year Bankruptcy Restrictions Order on 4 August 2022 in the County Court at Birmingham before District Judge Rich .

Official Receiver David Chapman said:

When applying for loans or any type of credit, the onus is on the applicant to provide correct information so that the lender can make an accurate assessment before making any payments.

Nadia Butt, Dorota Suchocka and Heidi Carruthers all showed a complete lack of disregard to their duties as an applicant or the consequence of their actions on their lenders. All three have received substantial bankruptcy restrictions and this will protect potential creditors from further abuse.

(Provided courtesy of The Insolvency Service)

David McGuinness, 41 of the Sutton Coldfield area of Birmingham, was sole director MC-Dalt Scaffolding Services Ltd, which was incorporated in 2017 with its registered office in Erdington in Birmingham.

In May 2020, McGuinness applied for and received a Bounce Back Loan of £50,000 on behalf of the company. Bounce Back Loans were a government scheme to help keep businesses afloat during the Covid-19 pandemic, whereby companies could apply for loans of up to 25% of their 2019 turnover, up to a maximum of £50,000.

He then applied to dissolve the business two months later, which led to the Insolvency Service opening an investigation.

Investigators found that McGuinness had stated the company’s turnover as nearly £300,000 when its accounts for 2019 showed turnover of less than £20,000. The company would therefore have only been entitled to a Bounce Back Loan of around £4,000.

Compounding this, instead of using the Bounce Back Loan money for proper company use, the day after receiving the funds he instead transferred nearly £15,000 out of the company’s account, with the bank reference ‘Dave’. A further £35,000 was transferred to various third-parties.

When applying to dissolve the company, McGuinness was legally required to notify interested parties and creditors, such as a bank with an outstanding loan, within seven days and that a failure to do so could result in a criminal prosecution. He did not follow this advice however.

On 13 December 2022 the Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from David McGuinness after he did not dispute he had abused the Bounce Back Loan scheme by claiming money to which his business was not entitled.

His ban lasts for 11 years and began on 3 January 2023. The disqualification prevents him from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court.

Peter Smith, Deputy Head of Insolvent Investigations at the Insolvency Service, said:

The Bounce Back Loan scheme was set up to support businesses in genuine need during the pandemic, and David McGuinness clearly abused it by making false declarations to his company’s bank.

This lengthy disqualification is a sign that we take such abuse extremely seriously and will act to tackle wrongdoing by these directors.