Our team, led by Mandeep Nagra, persuaded the Insolvency Service to drop its Director Disqualification investigation into our client for allegedly overstating company turnover when applying for a Bounce Back Loan (BBL)
NDP were contacted by the Director who had received correspondence from the Insolvency Service, and in particular a questionnaire to be completed by him, in order to help them in their investigations and to consider whether the Director’s conduct would merit director disqualification proceedings against him.
In this article, one of our director disqualification specialists, Mandeep Nagra details the allegations against the director and how the Insolvency Service were persuaded to drop the investigation.
The main areas of this director disqualification investigation were as follows:
- The misuse of a Bounce Back Loan (“BBL”) Scheme, given that the Director had declared on the BBL application a 2019 turnover figure of £583,380, whilst the Company accounts showed that the turnover for the years ended 31 June 2019 and 31 June 2020 were £90,427 and £59,781, respectively. The Company had therefore overstated its turnover and as a result had obtained more funds than it was entitled to.
At the onset it was highlighted to the Director the importance of answering the questionnaire received from the Insolvency Service very carefully, as his answers were being considered with a view of bringing director disqualification proceedings against him.
- According to the Director, there was a real and sound justification as to why he had stated the turnover figure of £583,380 on the BBL application, despite the Company accounts showing lower figures. Mandeep stated to the Director, that his justification needed to be evidenced with documents in support, as otherwise the Insolvency Service would simply dismiss any arguments on his behalf as to why he has used the higher figure on the BBL application form.
With guidance from Mandeep, the Director was able to prepare a spreadsheet, to evidence how he had calculated the figure of £583,380. Mandeep also tasked the Director to obtain bank statements to back up the figure of £583,380 and was therefore able to explain in the completed questionnaire the basis on which the Director had put the higher figure on the BBL application form.
In this case the Director’s business involved leasing properties from landlords and then subsequently converting and renting them out to tenants on a room-by-room basis. The total rent that was collected from the entire portfolio would have been the value of £583,380 and was collected in a “pooled bank account” for accounting reconciliation purposes rather than in the Company’s main business account, and hence why not shown in the Company’s accounts.
Mandeep in the completed questionnaire sent to the Insolvency Service was able to explain the above to them, and once they reviewed it, they subsequently abandoned their investigations against the Director.
The Director was delighted with the outcome
“From initial enquiry to working through the process no detail was left unseen with the help of Mandeep. He was very clear with possible outcomes and options, and ensured every communication and response was challenged to ensure no detail was left behind. Very happy with the outcome and had no doubt throughout the process with Mandeep’s guidance. Mandeep was also always available and responsive. “
Act quickly when you receive a letter from the Insolvency Service
It is important when you receive a letter from the Insolvency Service, or from one of their panel firms of of Solicitors, threatening Director Disqualification proceedings, and in particular a questionnaire to complete, to act quickly and thoroughly to make sure that the questionnaire is completed properly and with all the relevant evidence in hand.
If you are a Director facing a disqualification investigation by the Insolvency Service 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.
We are highly experienced in this area with a strong track record of success in persuading the Insolvency Service to drop their investigations. Take a look at more of our successes.
