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Case study: Director Disqualification investigation for alleged breach by the director client of the conditions of the Bounce Back Loan (‘BBL’) scheme by:

The director transferring BBL funds to a personal account; and

Not using the BBL funds for the economic benefit of the company.

NDP were contacted by the Director who had received correspondence from the Insolvency Service (‘IS’), who were investigating the Director’s conduct in his liquidated company and whether Director Disqualification proceedings should be brought against him.

The main areas of the IS investigation were:

  • Whether the BBL monies obtained by the Director had been transferred into his personal account.
  • Whether the BBL monies had been used for his personal benefit rather than for the economic benefit of the Company.

Under the terms of the BBL application it was clear that the monies derived from the BBL should be used for the economic benefit of the company.  If not so used, it was common ground that would constitute a breach of the terms of the BBL application.

The IS initially concluded that the Director had personally benefited from the BBL monies, following the transfer of sums totalling £41,300 to the Director’s personal bank account, just days after he had obtained the BBL monies.

It was now for the Director to respond.

NDP Senior Solicitor Mandeep Nagra worked with the Director who explained to the IS that the transfer of the BBL monies to his personal account was a mistake, but that he had not personally benefited and that monies derived from the BBL monies had in fact been used for the economic benefit the company.

Mandeep explained to the Director, that he had to provide all the necessary documents, such as invoice payments and bank statements to corroborate that stated position.

Mandeep was able to obtain the necessary documents from the Director and carefully presented this to the IS with a detailed letter of representation, explaining why in these circumstances there were no matters of unfitness to act as a director that could legitimately be alleged against the Director.

The Insolvency Service decided not to pursue the Director Disqualification investigation

On reviewing our letter of representation and the evidence in support, the IS wrote back to confirm that they did not propose to take disqualification proceedings against the Director.

The Director was delighted with the outcome.

This case shows that the IS are prepared to drop their investigations in matters, provided there is a defence and more importantly evidence in support. The IS are of course strangers to what went on in the company.  It is for the Director to fill in the factual gaps and explain the true position, as in this case.

If you are a Director facing an investigation by the IS for alleged misconduct including a breach of the conditions of a BBL, then please get in contact with our experienced team of Director Disqualification and Regulatory Solicitors on 0121 200 7040 or by email to law@ndandp.co.uk.