Judge Says It’s 4 Years Not 10 For A Director Disqualification Case

Chief Insolvency and Companies Court Judge Briggs disqualified Aurel Stan for 4 years, not the 10 sought by the Secretary of State.

Mr Stan sought a £50,000 bounce back loan for a company, ADS 14 Ltd. He overstated the company’s turnover on the application for the loan. The turnover was based on an estimate, which was not deemed a permissible basis for calculating the same. The upshot of that was that the company received around £20,000 more than it should have done.

The judge in The Secretary of State for Business And Trade v Stan [2026] EWHC 1164 (Ch) notably highlighted that where serious misconduct is alleged deserving of a disqualification period of more than 5 years, then the supporting affidvait should be notably particularised.

Here there was no suggestion of fraud, no suggestion of deceit and the loan was used for legitimate purposes. However, whilst the period of disqualification sought by the Secretary of State was 10 years, the judge knocked it down to 4.

However, the judge had this to say on the matter:

This is not a case where the Bounce-Back Loan was used for personal benefit. Nor is it a case where it can be claimed that Mr Stan knowingly or recklessly abused the Bounce-Back scheme to the detriment of tax payers.

In my judgment there is a distinction between cases where the misconduct is caused by mistake or a failure to take care and those cases where the misconduct is caused knowingly or recklessly. Knowing or reckless misconduct almost always places a director in the middle or top bracket of disqualification. This is because knowing or reckless misconduct will usually consist of dishonest behaviour, a conscious decision to ignore statutory and/or common law duties or a reckless indifference. Misconduct consisting only of mistake, error or failure to take care generally falls in the lower bracket or bottom of the middle bracket. This distinction is in my view grounded in the Sevenoaks Stationers categories.

I accept Mr Stan’s evidence that following the Bounce-Back Loan application there was a delay before the Company received the loan. I accept that the monies were paid by HSBC following a phone call he received whilst driving. It is more likely than not that the caller from HSBC asked Mr Stan if the application form was correct and he responded “yes”. I do not accept Mr Stan’s interpretation that HSBC had conducted an external check on the Company.

Nevertheless, I have no doubt that Mr Stan fell into error. In my judgment he failed to take care when completing the Bounce-Back Loan application and used the wrong metric: he forecasted the turnover of the Company by reference to the new business that was likely to materialise from Connect 2 Services Ltd.

The period must reflect Mr Stan’s culpability having regard to the Secretary of State’s case.

In my judgment, the proper characterisation of the conduct is decisive. The evidence establishes that Mr Stan did not act with any conscious disregard of his duties, nor with the reckless indifference that would justify placement in the middle or upper Sevenoaks brackets. His error lay in a failure to take proper care when completing the Bounce-Back Loan application, and in adopting an impermissible basis for calculating turnover. That was a serious lapse, involving a material misstatement in an application for public funds, and it cannot be dismissed as trivial. However as the Secretary of State does not allege, and the evidence does not support, any knowing or reckless misconduct, the case must fall within the lower bracket. Within that bracket the period must still reflect the gravity of the misstatement and the need to protect the public from directors who, even without dishonesty, fail to exercise the basic standards of accuracy and diligence required of them. A disqualification of four years properly marks that level of culpability and meets the protective purpose of the regime.