Home improvements firm failed to complete more than £300,000 of building work and used £11,000 of a £50,000 Bounce Back Loan to repay a director’s loan
We have reported recently on many director disqualifications for Covid Loan abuse cases. In this case, the situation was was compounded by the director of a construction company taking payments from clients, whilst insolvent, that could not be fulfilled which led to a substantial director disqualification ban.
The details of this case
Samantha Fairweather, 53, was the sole director of Fairweather Construction Ltd when it sought advice from an insolvency practitioner in April 2022, owing more than £100,000 in unpaid tax.
The company had taken deposits from homeowners worth more than £150,000 by this time for building work such as the installation of new windows or conservatories which it had not finished.
However, Fairweather Construction then proceeded to take a further £177,900 in payments for further building projects it did not complete, including £37,370 in deposits for new work, before it was liquidated in the autumn of 2022 with liabilities of more than £700,000, which prompted an investigation by the Insolvency Service (IS) for trading whilst insolvent, as legislated for in the Insolvency Act 1986, section 214.
The director also caused her company to breach the rules of the Covid Bounce Back Loan Scheme in May 2020 by using £11,000 of the £50,000 she obtained to repay a director’s loan. These payments were not for the economic benefit of the business as they had to be under the rules of the scheme.
Neil North, Chief Investigator at the Insolvency Service, said:
“Samantha Fairweather knew, or ought to have known, that the company she was a director of had unpaid debts to HMRC and had been unable to fulfil its obligations to existing customers.
The company then took significant amounts of money from homeowners for house extensions and projects which were never done.
Members of the public need protection from this kind of activity which is why Fairweather will no longer be able to act as a company director until October 2032.“
The outcome
The Secretary of State for Business and Trade accepted a disqualification undertaking from Fairweather, and her eight-year ban began on Monday 21 October 2024.
The disqualification prevents her from becoming involved in the promotion, formation or management of a company, without the permission of the court.
Our Comment
There was probably no other outcome for this director. Both trading whilst insolvent and Covid loan abuse are serious offences.
However, we come across many cases where the liquidation of a company has attracted an IS investigation and yet, upon close examination, we have been able to demonstrate to the satisfaction of the IS that the conduct identified as Unfit Conduct by the IS was not that, once all the facts of the case (many of which were previously unknown to the IS) were drawn to the attention of the IS. The key here is that context, and communicating it to the IS, is everything. As a result, we have helped many directors avoid director disqualification. Take a look at some of our testimonials.
Contact our director disqualification solicitors for an initial free of charge discussion if you are being investigated by the Insolvency Service. The sooner we are instructed, the more we can do to help.
