Our client said: ‘The work that NDP prepared was exemplary. They quickly assimilated the facts surrounding the case and incisively formulated a comprehensive defence. They were truly excellent.’
In this case from December 2023, the company had applied for a BBL and then went into insolvent Creditors’ Voluntary Liquidation (CVL). The Insolvency Service (‘IS’) alleged that the company was not eligible to receive that BBL, because on these facts the company already had obtained a loan via the Coronavirus Business Interruption Loans (‘CBILS’) Scheme. NDP were contacted by the Director who had received correspondence from the IS, who were investigating the Director’s conduct into his failed company, to determine whether Director Disqualification proceedings should be brought against him.
The main IS areas of investigation/alleged misconduct issues, were as follows:
- The Director had caused his company to make an application for a BBL resulting in the company receiving a maximum BBL of £50,000, which it was not eligible for. The company had already received a sum of £150,000 prior to obtaining the BBL, via the CBILS scheme. The rules (it was said) did not permit this scenario.
- The company applied later for a second CBILS loan resulting in the company receiving £210,000 for which it was also not eligible.
- To compound matters, the IS also alleged that the monies received by the company were used for personal use and for not for the purposes as set out in the completed application form, in particular to repay the BBL and to purchase new spare parts to aid the company.
Summary – In short, the Director had a mountain to climb if he was to avoid Director Disqualification.
Mandeep Nagra*, a senior NDP Solicitor, took detailed instructions from the Director in order to understand the nature of his business, and then obtained from him all relevant evidence, to allow him to prepare a detailed letter of representations on his behalf to the IS setting out why it was not ‘expedient in the public interest’ (i.e. the legal test for the IS) to continue its DDI.
Mandeep set out in the letter of representations to the IS the genuine reasons why the company had failed to repay the BBL monies from the CBILS loan obtained and also demonstrate that the monies obtained for the business of the company were in fact used for the intended purpose as set out in the second CBILS application form.
In short, the matters complained of were not nearly as black and white as the IS suggested.
Outcome – The IS dropped the investigation
Following NDP’s letter of representations, the IS wrote back to confirm that they did not propose to take director disqualification proceedings against the Director.
The Director was delighted with the outcome, saying:
‘The work that NDP prepared was exemplary. They quickly assimilated the facts surrounding the case and incisively formulated a comprehensive defence. I can’t thank them enough for guiding me through this very stressful period. They were truly excellent.’
It is important, when you receive a letter from the IS, threatening Director Disqualification proceedings, to act promptly, and to seek expert legal advice. This case shows with the right evidence and arguments in support that investigations from the IS can be dropped.
If you are a Director facing an investigation by the IS for alleged misconduct including the misuse 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 email@example.com.
*This article was written by Mandeep Nagra, who qualified as a solicitor in 2000 and is an experienced litigator, especially in the area of Insolvency and Director Disqualification. Prior to qualifying as a solicitor, , he gained valuable experience working for a firm of Insolvency Practitioners in Birmingham, and then as an investigator with the Director Disqualification Unit at the Insolvency Service both in their London and Birmingham offices. At the Insolvency Service he was responsible for preparing and managing disqualification cases against directors of failed Companies on behalf of the Secretary of State for Business Innovation and Skills (now known as the Secretary of State for Business Energy and Industrial Strategy). This means he has experience on both sides of the fence.