Nina dropped this thank you letter in to us to let us know how everyone’s generous contributions helped the Cynthia Spencer Hospice.
PBC Charity Golf Day September 2021
Many thanks to everyone for attending our PBC charity golf day on 14th September raising much needed funds for the Cynthia Spencer Hospice.
Thanks to our players amazing generosity, the total amount of money raised for the Cynthia Spencer Hospice was £2,114.
Thank you to Tom Low of Propel for your very generous sponsorship, very much appreciated.
Many thanks to Nina Gandy for coming along and talking to us about the Cynthia Spencer Hospice.
Congratulations to Bobby Russell for the best score and also to him with the rest of his team for the highest scoring team (David Smith, Adam Holby and Adam Ashenden). Well done guys.
It was lovely to see 2 ladies taking part, and we hope that trend continues.
We hope to see you all again next year, if not before!
It is winding up, but not as we know it.
On 10 September 2021 the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021 was laid before Parliament and comes into force with effect from 29 September 2021.
For most people, that maybe a case of, “So what?” However, for those who are thinking of enforcing the repayment of debts it will have a logistical impact.
As many will know, prior to the introduction of the Corporate Insolvency & Governance Act 2020 (“CIGA”) a creditor, owed £750 (or more) could present a winding up petition against a debtor, following either an unsatisfied judgment or the expiration of a statutory demand. However, provisions within CIGA prohibited the use of statutory demands or winding up petitions, unless it could be proven the petition debt did not arise (or become unpayable) as a direct result of Covid-19. These interim provisions were due to expire on 30 September 2021, having previously been extended on previous occasions.
We can all speculate on why the CIGA temporary provisions were extended. However, suffice to say the continuation of Covid-19 and the feared impact of “Letting loose” frustrated debtors to pursue unpaid debt (and its impact on the economy) were clearly on the agenda.
In short, the temporary provisions being introduced:
- Increase the debt that must be owed to present a company winding up petition to £10,000.
- Creditors must seek proposals from the debtor business for repayment of the debt, giving 21 days to respond before they can proceed with a winding up petition: and
- Commercial Landlords must still demonstrate to a court that debts are not Coronavirus related until the end of March 2022.
Many believe the £10,000 limit should remain beyond these temporary measures but that is a discussion for another day.
The more interesting measure is the introduction of the 21-day notice. At first, those who deal with debt recovery may ask what is the difference between a statutory demand (that provides 21 days to pay or secure the debt in any event). You may even ask whether a statutory demand still needs to be served after this new 21-day notice has expired.
Thankfully, the amendments to the schedule provide the answers.
Paragraph 4 includes two distinct requirements (in addition to those already prescribed):to the schedule provides the 21-day notice must contain:
(e) a statement that the creditor is seeking the company’s proposals for the payment of the debt, and
(f) a statement that if no proposal to the creditor’s satisfaction is made within the period of 21 days beginning with the date on which the notice is delivered, the creditor intends to present a petition to the court for the winding-up of the company.
This is a significant shift from the requirements within a statutory demand as it appears to be steering an unpaid debt scenario down the road of Alternative Dispute Resolution. This assumption appears to be supported by the fact a statutory demand is not required on the expiry of the 21-day letter. However, Rule 7.5(1) of the Insolvency (England & Wales) Rules 2016 have been amended to include two statements on the winding up petition, namely:
(1) that the requirements in paragraph 1 of this Schedule are met, and
(2) that no proposals for the payment of the debt have been made, or a summary of the reasons why the proposals are not to the creditor’s satisfaction (as the case may be).
In theory, this appears like a sound compromise to ensure there is not a flood of winding up petitions from 1 October onwards. However, the issue regarding whether any proposals are satisfactory, or not, appears subjective. If a petitioner believes they are not satisfactory, what happens at the first hearing of the petition? What if the court adopt the view the petitioner was unreasonable in either refusing the proposals or, in the alternative, had not engaged in settlement negotiations? Worse still, if the petition is dismissed in favour of payment terms, who pays the costs, not to mention consideration of any damage caused by the petition having already been advertised?
At PBC we are taking the view these interim measures were attempting to allow debtors to pursue unpaid debts but in a commercial and understanding manner. In short, avoiding the potential flood of recovery action that has been the fear behind previous extensions. It also sends out a warning to those on the receiving end of debt enforcement and that is to act in a timely and appropriate manner when considering the viability of your business.
Should you have an insolvency-related issue then please contact me at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to garypettit@pbcbusinessrecovery.co.uk or access our website at www.pbcbusinessrecovery.co.uk
Should accountants report on clients?
Have any of your clients taken out a Covid-based loan? If so, then what are your responsibilities as the advising accountant?
At PBC we have noticed a marked increase in businesses looking to close down (by way of strike off or through liquidation) where there is an outstanding bounce back loan (“BBL”) or a CBIL, or in some cases, both.
Due to the uncertainty of what must be done to demonstrate they have exhausted all avenues of recovery (before being able to claim under the Government guarantee) lenders are objecting to strike off. Lenders are also writing to directors, pressurising them to repay the Covid loans. There is also a notable heightened attention to companies in liquidation with unpaid Covid loans (for director disqualification and restoration purposes) where Covid loan monies have been used for personal benefit. As you will be aware, in order to receive a BBL in the first instance, the applicant had to confirm it would not be used for personal purposes but working capital for the business.
So, where does this leave the advising accountant?
While accountants are not required to identify what a BBL was used for, it is likely they will receive this information when preparing their clients’ accounts. If accountants consider their clients may have used BBL funds for personal purposes (e.g. to redeem a personal loan or to purchase a family car etc) they may, depending on the circumstances, have an obligation to submit a Suspicious Activity Report (“SAR”).
ICAEW members (whether in private practice or in business) must adhere to the Code of Ethics which includes the fundamental principle of integrity. Paragraph R111.2 provides an accountant shall not knowingly be associated with reports, returns, communications or other information where they believe that the information:
- contains a materially false or misleading statement; or
- contains statements or information provided recklessly; or
- omits or obscures required information where such omission or obscurity would be misleading.
In addition to the ethical code, accountants must consider their anti-money laundering obligations. In general, accountants are required to submit a SAR to the National Crime Agency, where information comes to them in the course of their business, which leads them to suspect that another person is engaged in money laundering.
As will be the same for insolvency office holders, accountants should question the application of Covid loan monies and consider whether those monies now form an adverse directors’ loan account. These enquiries may sail close to tipping off under the money laundering regulations so extra caution is advised in such circumstances. In our opinion, serious consideration of submitting a SAR must be given if the information to secure the BBL or CBIL in the first instance was false or misleading.
As a guide, when looking at circumstances specifically surrounding BBLs we suggest advising accountants consider:
- Had the company filed dormant accounts for 2019 and/or 2020?
- Was turnover overstated (in the on-line application) by more than 25%?
- Was a loan obtained for more than 25% of turnover?
- Were the directors aware of insolvency at the time of application?
- Was the application after a petition or winding up resolution?
- Was the business trading outside of the UK?
- Had the business ceased trading pre-1 March 2020?
Directors are increasingly seeking to defend insolvency officeholder actions by pointing the accusing finger at their accountant and if that accountant has failed to meet their prescribed duties it could place them in an uncomfortable position. It, therefore, goes without saying you should be satisfied with the level of conduct demonstrated by your client when it comes to BBL or CBIL as, with some 1.5 million loans made, this could become a very hot topic.
Should you have an insolvency-related issue then please contact me at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to garypettit@pbcbusinessrecovery.co.uk or access our website at www.pbcbusinessrecovery.co.uk
End of Temporary Insolvency Measures
Creditor Enforcement to Re-commence
Since June last year, the Corporate Insolvency and Governance Act 2020 included temporary measures that prevented creditors from serving statutory demands or presenting winding up petitions, other than exceptional circumstances.
These measures have previously been extended with the latest extension up to 30 September 2021. However, it has been announced today (8 September) no further extensions shall be sanctioned. In short, creditors will be able to use statutory demands and winding up petitions to enforce debt positions with effect from 1 October.
In an effort to cushion the threatened explosion of winding up petitions, the removal of these temporary provisions has been tempered slightly by adding some interim provisions that will be in force until 31 March 2022:
- To protect businesses from creditors insisting on repayment of relatively small debts the current minimum debt threshold for a winding up petition has been increased from £750 to £10,000
- Creditors shall be required to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action.
However, existing restrictions will remain in place for commercial landlords whereby presenting winding up petitions against limited companies to repay commercial rent arrears built up during the pandemic is prohibited. This is consistent with the continued moratorium over commercial landlords where tenants will remain protected from eviction until 31 March 2022, whilst the government implements a rent arbitration scheme to deal with commercial rent debts accrued during the pandemic.
In response to this announcement, Gary Pettit of PBC said,
“It was inevitable the CIGA moratorium on creditor enforcement would end, particularly as the interim provisions were becoming a “Debtors’ charter” and damaging the economy overall. The hike in minimum petition debt is welcome and should be made a more permanent monetary limitation but time will tell. With the likes of HMRC being unleashed on about 18 months’ worth of tax debts life could get challenging for businesses where debt has accrued. The potential of an explosion of debt enforcement activity means businesses need to think about their position and take early advice as the earlier that advice is taken, the more options that are generally available.”
Should you have an insolvency-related issue then please contact Gary Pettit at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to garypettit@pbcbusinessrecovery.co.uk or access our website at www.pbcbusinessrecovery.co.uk
Beware the Elephant Traps
Something I have been asked several times recently is when should directors seek advice from an insolvency practitioner. My answer is always “as soon as possible” as there are more options available the earlier advice is sought, with the likelihood of rescue and recovery markedly higher.
The other advantage is that a director is less likely to step on what I call the elephant traps. These antecedent transactions, explained below, can lead to personal liability for the director to restore the position to what it would have been prior to the transaction taking place.
- Preference
The Insolvency Act 1986 defines a preference as where a payment is made to a person and “that person is one of the creditors or guarantor for any of the debts and [the insolvent] does anything which has the effect of putting that person into a position which will be better than if that thing had not been done”.
It needs to be proved that the company was insolvent at the time (or as a result) of the transaction and that there was a desire to prefer the creditor or guarantor. However, where the recipient of the preference is a party connected with the company (e.g. a director or relative of a director or a company of such a person) then the desire is presumed. Finally, the payment needs to take place within a relevant time which is 6 months prior to the company entering liquidation or administration, although this is extended to two years when the recipient is connected.
Typically, preference payments involve payments being made to directors to clear loan accounts, to creditors personally guaranteed by the director or to suppliers which the director intends to utilise should they start a new business.
- Transactions at an Undervalue
A transaction at undervalue occurs when a company “makes a gift or otherwise enters into a transaction that provide for no consideration” or “enters into a transaction for a consideration the value of which is significantly less than the value provided” in the two years prior to the company entering liquidation or administration. Additionally, it needs to be proved that the company was insolvent at the time (or as a result) of the transaction.
The most common examples are the gifting of assets to directors or the transfer of an asset the director believes is theirs (e.g. a company car) for a value far less than it was worth.
- Transactions Defrauding Creditors
A transaction defrauding creditors arises when a company “makes a gift or otherwise enters into a transaction that provide for no consideration” or “enters into a transaction for a consideration the value of which is significantly less than the value provided”.
On the face of it, that sounds exactly like a transaction at undervalue but in this case it needs to be proved there was an intent to put assets beyond the reach of anyone likely to make a claim (typically a creditor). There is no need to prove insolvency and the transaction does not need to occur in a relevant time period.
Often these cases involve scenarios where financial arrangements are changed to ensure one party holds the assets while another takes all the risk.
- Wrongful Trading
Wrongful trading occurs where “at some time before the commencement of the winding up, [a director] knew or ought to have concluded that there was no prospect of avoiding insolvent liquidation”.
Case law has held that a director can be held personally liable for the increase in liabilities from the point where they ought to have reached the conclusion to the time when the company ultimately enters liquidation or administration. A statutory defence is available to directors where “they took every step with a view to minimising the loss to the company’s creditors”.
An example would be directors acknowledge their company had suffered losses and there was insufficient capital to keep the company trading. Over the next two years (say) debts increased by £200,000 and the company went into liquidation owing £350,000. The wrongful trading (and personal liability) is the £200,000 increase.
- Fraudulent Trading
Fraudulent trading carries criminal sanctions as well as personal liability for any party “knowingly … carrying on business with intent to defraud creditors or for any fraudulent purpose”. The company does not need to be insolvent at the time of the fraudulent trading, which could be as simple as a single act.
A single act could be the taking of a loan, using the funds for personal benefit and having no intention of repaying the loan. This would include the government backed Covid support schemes.
- Misfeasance
Misfeasance occurs where a director breaches their duty (fiduciary or otherwise) in relation to the company. Common examples of this include adopting a systematic policy of avoiding paying taxes to HM Revenue & Customs, failing to maintain adequate books and records and paying dividends where there were not the available reserves to do so.
It is a common policy for director/shareholders to pay themselves a mixture of salary and dividends to reduce the tax liability but recent court judgements have held that dividends cannot subsequently be converted to salary if challenged.
Except with the statutory defence outlined above for wrongful trading, the antecedent transactions outlined have no defence so if a director steps on the elephant trap there is mitigation. As a result, I must return to what I said at the outset that if advice is not taken as soon as possible, then this position could result in significant sums becoming payable by the director.
Fraudulent companies shut down after abusing COVID loan support
Two companies who fraudulently applied for thousands of pounds worth of COVID support loans have been wound up in the courts.
The two separate companies submitted false documents to at least 41 local authorities and the Government’s Bounce Back Loan scheme to secure £230,000 worth of grants put in place to support businesses during the pandemic.
LV Distributions Ltd and SIO Traders Ltd were wound-up in the High Court in separate hearings on 27 July 2021 following confidential enquiries conducted by the Insolvency Service, which proved neither company ever traded.
Investigators uncovered that SIO Traders registered their offices in Whitchurch, Shropshire, but provided false lease documents and utility bills to 14 different local authorities to fraudulently claim they traded out of premises in their respective areas.
SIO Traders claimed they supplied PPE and secured £95,000 worth of business grants from 10 local authorities. The company also received a £50,000 Bounce Back Loan they were not entitled to.
LV Distributions had registered their offices in Redhill, Surrey, and claimed to sell medical care products. Similar to SIO Traders, in a 10-day period between 17 and 27 August 2020, LV Distributions provided false lease documents and utility bills to 27 local authorities.
The company fraudulently secured £35,000 in business grants from 2 local authorities, as well as a £50,000 Bounce Back Loan. Investigators, however, uncovered that the premises LV Distributions falsely claimed to operate from were either unoccupied, up for rent or occupied by a different company.
Small Business Minister Paul Scully said:
This decisive enforcement action shows that we will not tolerate shameless attempts to defraud the taxpayer and falsely claim public money intended to help businesses through the pandemic.
We are cracking down on Covid fraud across the board and those who have tried to take support they were not entitled to, which was given in response to the worst crisis of our lifetimes, can expect to face heavy consequences.
Herefordshire County Council was targeted on two occasions by SIO Traders. The local authority initially paid £10,000 after SIO Traders’ first fraudulent application but was able to recover the funds in full, before rejecting a second £10,000 application and reporting the company’s activities.
The Council also received a further £10,000 application from LV Distributions, which was also rejected, saving the local authority a total of £30,000 in fraudulent grant claims.
Herefordshire Council’s Cllr Liz Harvey, Cabinet member for finance, corporate services and planning, said:
We have spent more than a year allocating millions of pounds of financial support for local businesses who have been affected by the pandemic. To see companies trying to take advantage of this difficult and unprecedented situation, and fraudulently claim support that is intended to help those who really need it, is despicable.
Herefordshire Council will not tolerate fraud, and it is pleasing to see these two companies wound up.
Guildford Borough Council’s Lead Councillor for Resources, Cllr Tim Anderson, said:
We stopped fraudulent requests from LV Distributions and SIO Traders to register as business rate payers in 2020 which, if successful would, have allowed the businesses to receive a Coronavirus (Covid-19) Business Support Grant.
Defeating fraud involves diligence and public sector bodies working together, and we are pleased that the Insolvency Service has been able to take such strong action.
Cllr Laura Mayes, Deputy Leader of Wiltshire Council, said:
We brought staff from across the council to work together and assess more than 15,000 claims for Covid-19 business support grants. The staff brought their experience and local knowledge to the process, which included counter fraud experience and working with National Anti-Fraud Network.
The lengths that fraudsters went to as they tried to falsely claim grants surprised even our most experienced staff, but by using national counter fraud networks, concerns could be raised quickly and trends and patterns were shared with other authorities.
We are very proud of the way our teams supported so many businesses in extraordinary circumstances, and we are also pleased that they foiled attempts by a small minority to exploit the misery that Covid-19 has brought to so many.
Notes to editors
After the two companies were wound up in the courts, the Official Receiver was appointed Liquidator of the two companies.
All public enquiries concerning the affairs of the companies should be made to: The Official Receiver, Public Interest Unit, 16th Floor, 1 Westfield Avenue, Stratford, London, E20 1HZ. Telephone: 0300 678 0015 Email: piu.or@insolvency.gov.uk.
The petition against SIO Traders Ltd (Company number 11864792) was presented under s124A of the Insolvency Act 1986 on 17 May 2021 at the Business and Property Court in Manchester in front of DJ Bever.
The petition against LV Distributions Ltd (Company number 11892823) was presented under s124A of the Insolvency Act 1986 on 25 May 2021 at the High Court in London in front of Judge Burton.
The Insolvency Service will also soon have extra powers to investigate Bounce Back Loan fraud in cases where the company has been dissolved. The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, currently before Parliament, if passed will give the Insolvency Service powers to investigate, and if appropriate take action to disqualify directors of companies which have fraudulently claimed Bounce Back Loans but which have since been dissolved. This power will be retrospective to allow conduct that took place before the law comes into force to be investigated.
Company Investigations, part of the Insolvency Service, uses powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK on behalf of the Secretary of State for Business, Energy & Industrial Strategy (BEIS).
A Government scorned?
How many of you have taken out a bounce back loan, a CBIL, claimed furlough or even claimed under the Eat out to Help out scheme? I guess many readers will be nodding their head at this point because most businesses have claimed some of this Government support during the pandemic lockdown.
For many businesses these schemes will act as the saviour and the loans will be repaid in accordance with the terms. However, there has also been plenty of media surrounding those who have misused or misapplied funds originating from these schemes. At the end of the day, it is taxpayers’ money (and will have to be repaid in due course) so those more unscrupulous applicants need be aware of the potential consequences.
While bounce back loans and CBILs under £250,000 are not personally guaranteed, directors need to understand that does not mean you escape personal liability. For example, if a director draws down some of the loan to pay personal liabilities, that in turn creates a directors’ loan account, being a debt repayable to the company. It can get worse as HMRC could determine that the personal use was income and accordingly, gives rise to PAYE where the director can be held personally liable.
It has been reported that as of 30 June 2021 HMRC had conducted more than 12,000 investigations into coronavirus fraud. Indeed, there have been several arrests with the number of prosecutions inevitably going to rise over time. Further, a director in Bolton was disqualified from acting as a director for 11 years after he claimed a bounce back loan when not eligible and subsequently used the funds for personal gain.
In the disqualification case (above) the director, clearly, thought ensuring there were insufficient accounting records would aid his defence as there was no evidence of accountability. Apart from a failure to maintain accounting records can be a criminal offence, banking records will always offer some form of transaction tracing.
So, what should I do?
I am bound to say, take early advice.
If you have used the corporate schemes for personal benefit, then look at how you are going to repay the amount taken. When liquidators pursue a director for malpractice, they are looking for restoration and this can become a drawn-out and costly affair for the director.
A common practice appears to be to extinguish personal loans by way of dividends. However, if the company has insufficient reserves, then drawing dividends is unlawful. Even if there are sufficient reserves, a loan-extinguishing dividend is exposed to challenge as a breach of duty.
In terms of any breach in the job retention scheme, while it seems concerning, you should confess to HMRC and seek ways of restoring the position. It is better to approach HMRC and include a proposal for making good than to be found out!
The Government have made it clear HMRC are to adopt a commercial understanding when it comes to recovery of tax liabilities and coming forward early should facilitate a structured restoration agreement. Stick your head in the sand then be prepared as hell hath no fury like [the Government] scorned!
Should you have an insolvency-related issue then please contact Gary Pettit at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to garypettit@pbcbusinessrecovery.co.uk or access our website at www.pbcbusinessrecovery.co.uk
Insolvency Service takes action against businesses abusing COVID-19 financial support.
What will happen with those who abuse the Government-backed COVID financial assistance loans? This is a question I am being asked regularly and the following release from The Insolvency Service may provide the answer.
“Raashid Khan (26) has been disqualified as a director for 12 years after fraudulently claiming £50,000 through the Bounce Back Loan Scheme (BBLS) before transferring the full amount out of the company’s account to himself just days before his company went into administration.
Khan, from Birmingham, was director of Ikandy Wholesale Ltd, which bought and sold bulk goods, including fireworks and fresh meat.
Despite Ikandy Wholesale’s company accounts being frozen after it was confirmed the company was to be shut down, Khan forged a document to convince his bank that the winding up order had been revoked. This allowed him to transfer around £70,000 out of the account, including a £50,000 Bounce Back Loan, which he had secured less than two weeks previously.
Since February 2021, the Insolvency Service has successfully petitioned the Courts to wind up five limited companies that have been involved in abusing government loans, introduced to help businesses during the pandemic.
These include a furniture retailer in Manchester, and two Glasgow-based companies, for which no legitimate business activity was identified since at least January 2020.
Two of the companies secured Bounce Back Loans, at least one of which was procured based on false information. One of the Glasgow-based companies also secured two Coronavirus Business Interruption Loans totalling £240,000 based on false information.
Dave Elliott, Chief Investigator at the Insolvency Service, said:
‘The Bounce Back Loan scheme was made available to help support businesses during the pandemic. It is outrageous that some directors have been trying to abuse this support, and the action we have taken shows we take this issue extremely seriously.
I urge anyone who suspects a company has been involved in this kind of abuse or has information about directors fraudulently obtaining Covid business support, to alert us immediately’.
The Insolvency Service will also soon have extra powers to investigate Bounce Back Loan fraud in cases where the company has been dissolved.
The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, currently before Parliament, if passed will give the Insolvency Service powers to investigate, and if appropriate take action to disqualify directors of companies which have fraudulently claimed Bounce Back Loans, but which have since been dissolved. This power will be retrospective to allow conduct that took place before the law comes into force to be investigated.
If wrongdoing or malpractice is found, directors can face sanctions including a ban of up to 15 years, and potentially criminal prosecution.
If you suspect a business or company director has behaved fraudulently and abused government loans, you can report it to the Insolvency Service.
Notes to editors
Misconduct: information on companies and directors
Raashid Khan is from Birmingham and his date of birth is August 1995. He was director of Ikandy Wholesale Ltd (Company number 09908283).
Global Trading Europe (GTE) was based in Leicester and sold furniture from premises in Manchester under the trading name ‘Unique Homes’. The company had not in fact traded since early 2019. Company director Dariusz Zemanczyk, from Poland, claimed a £50,000 Bounce Back Loan based on fraudulent company accounts. GTE was wound up by the High Court in Manchester on 16 March 2021.
Balgownie Wholesale Distribution Services Ltd based in Glasgow, obtained two Coronavirus Business Interruption Loans totalling £240,000 by provision of false and misleading information. MGH Properties Ltd, also based in Glasgow, obtained a Bounce Back Loan of £50,000. The Insolvency Service investigation identified numerous connections between the companies and the fictitious transactions shown in the bank statements that were produced to prospective lenders. Balgownie’s website stated that it provided services which include distribution, international logistics, and wholesale and that it was a leading international supplier of high-quality stock to the trade and public. However, the website content appeared to have been cloned from that of a reputable company. It was wound up by the Court of Session in Edinburgh on 1 April 2021. MGH had previously operated as a hotelier but ceased involvement in that activity in approximately January 2020. It was wound up by the Court of Session in Edinburgh on 1 April.
In February 2021 Liquor World (Scotland) Ltd (company registration number SC472891) was wound up in the Court of Session in Edinburgh having obtained loans based on false and misleading information, including a £50,000 Bounce Back Loan.
Also in February 2021, Fortress Restructuring Ltd (company registration number SC595429) was wound up in the Court of Session in Edinburgh after an investigation found that the company had obtained a £50,000 Bounce Back Loan based on false and misleading information. The investigation also found examples of misleading marketing material around the company’s insolvency-related services.”
The above actions clearly demonstrate investigations into COVID support malpractice are being done and directors who believe this is relevant to them ought to look on how they can restore the position.
Should you have an insolvency-related issue then please contact me at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to garypettit@pbcbusinessrecovery.co.uk or access our website at www.pbcbusinessrecovery.co.uk
Firms reassured over post-Covid debts
BBC Website: Firms reassured over post-Covid debts – BBC News
The government has told business leaders it will take a “cautious approach” to firms that owe it money in the wake of the coronavirus pandemic.
The message came in a letter from Business Secretary Kwasi Kwarteng to the Institute of Directors and R3, which represents insolvency firms.
In the letter, first reported by the Financial Times, he said enforcing insolvency would remain a last resort.
The government has spent billions protecting the economy from Covid.
As part of these efforts, measures preventing firms from being wound up if they fall into insolvency have been extended until the end of September.
However, it is feared some companies could struggle to survive when emergency support measures begin to be removed.
Government help available to businesses includes loans, tax relief and cash grants.
However, many firms will have deferred taxes, including VAT, that will start to fall due as the country emerges from the pandemic.
When company insolvencies involve unpaid VAT and income tax, HMRC has the status of “preferential creditor”, which means it gets paid first.
But business leaders want the government to ensure this is used to help companies restructure, rather than to shut them down.
In the letter, seen by BBC News, the business secretary writes that he “recognises the path back to full trading and coming off government support will be difficult for many companies”.
In response to concerns about firms becoming insolvent because of money owed to the Treasury through loans and support schemes, Mr Kwarteng says HMRC will take a “cautious approach to enforcement of debt owed to government” which has been accrued during the pandemic, “including from the number of loans and support schemes given”.
“It is right that where government has stepped up, through the general taxpayer, to support the economy during this national emergency, that business should do all it can to pay its fair share of taxes and repay back loans where it can,” he says.
He adds that it will be flexible with companies who engage with it in order to manage their debt.
There is pressure on the government to recoup some of the vast amounts spent supporting the economy during the pandemic – and Mr Kwarteng writes that a return to normal insolvency processes will be vital for a healthy economy.