Two Directors Banned For Bounce Back Abuse
Two Directors banned for Bounce Back abuse are Aamer Aslam, 39 from Huddersfield, and Razwan Ashraf, 31 from Keighley
Scholars Tuition Centre Bounce Back Abuse
Scholars was incorporated in December 2018 and sought to trade as a tuition centre for children aged 5 to 17. Aamer Aslam applied for a Bounce Back Loan in May 2020 and provided an estimate of company turnover at £200,000.
Abuse Of Turnover Declaration By The Directors
Although it was permitted for a company to apply for a Bounce Back Loan based on projected income in certain circumstances, the Insolvency Service’s review of Scholars’ bank statements showed maximum monthly income of nothing more than £640, meaning that its annual turnover could not have been greater than £7,680.
Consequently, Scholars was not even eligible for a Bounce Back Loan because it did not meet the £8,000 minimum annual turnover requirement.
Liquidation Shortly After Bounce Back Loan Obtained
However, Scholars obtained a Bounce Back Loan of the maximum available sum of £50,000 in May 2020. It thereafter crashed into Creditors Voluntary Liquidation in January 2021. At the time of Liquidation, the Directors listed the company’s liabilities to the bank as £7,000 and yet the bank informed the Liquidator it was owed £50,000.
The Insolvency Service investigation found that as well as wrongly exaggerating the company’s turnover, Aslam and Ashraf used the Bounce Back monies lent to make monthly payments to four individuals.
All four, one of whom was a relative of Ashraf, began receiving £2,000 per month following receipt of the Bounce Back Loan monies. Notwithstanding assertions made by the Directors such payments were bona fide business costs, there was no evidence for the same.
Progress First Limited’s Bounce Back Abuse
It was notable that this was not the first time that one of the Directors has gone into Liquidation with a Bounce Back Loan. Razwan Ashraf was also sole director of another educational company, Progress First Ltd, which had been incorporated in January 2018.
He applied for a Bounce Back Loan in May 2020 and yet again issued a false and misleading declaration concerning that company’s annual turnover in 2019. Again the suggestion was turnover of £200,000. However, Progress’ bank statements showed that turnover was £38,973.
Progress obtained a Bounce Back Loan of £50,000 when it would only have been entitled in all likelihood to a Bounce Back Loan at most of £9,927.
As with Scholars, Ashraf claimed that the Bounce Back Loan funds were used to pay legitimate costs of the company. However, regular payments were made to three individuals and no evidence was produced to show that these payments were proper costs of the company, incurred wholly and exclusively for the purpose of the trade.
Settlement With Progress First Ltd’s Liquidator
Ashraf has since repaid £35,000 to the Liquidator to settle claims against him for the Progress Bounce Back Loan funds, and a further £25,000 in settlement of claims against both directors in relation to the Bounce Back Loan taken out by Scholars.
Disqualification Proceedings: Directors Banned For Bounce Back Abuse
The Secretary of State accepted disqualification undertakings from both directors, with Aamer Aslam banned for 11 years, and Razwan Ashraf banned for 10 years.
The disqualification undertakings prevent both from directly, or indirectly, becoming involved in the promotion, formation, or management of a company, without the permission of the court.
Insolvency Service Comment
Mike Smith, Chief Investigator for The Insolvency Service said:
Government loan schemes have provided a lifeline to millions of businesses across the UK – preserving their existence during the pandemic and protecting millions of jobs. As these cases show, The Insolvency Service will not hesitate to investigate and use its powers against those who appear to have abused the COVID-19 support schemes.
Oliver Elliot Comment
We are seeing the fallout from Bounce Back Loans now with a concerning amount of applications suggesting that declarations have been made on the application forms which inflated the level of turnover far in excess of the underlying historical and even projected level. Directors who embarked upon such an approach cannot be surprised if the Insolvency Service adopts a robust approach to attempt to root out such conduct within the business community.
- 1 Two Directors Banned For Bounce Back Abuse
- 2 Scholars Tuition Centre Bounce Back Abuse
- 3 Progress First Limited’s Bounce Back Abuse
- 4 Settlement With Progress First Ltd’s Liquidator
- 5 Disqualification Proceedings: Directors Banned For Bounce Back Abuse
- 6 Insolvency Service Comment
- 7 Oliver Elliot Comment
- 8 What Next? Directors Banned For Bounce Back Abuse
- 9 Recent Posts / View All Posts
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What Next? Directors Banned For Bounce Back Abuse
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