Our clients were facing an allegation that they had knowingly submitted a bounce back loan application using inaccurate and over-inflated turnover figures. They were facing significant bans and a compensation order of almost £50,000.
Background
Our clients were devastated when their family-run business went into liquidation due to the COVID-19 pandemic. However, that was only the start of their worries. Shortly after the company ceased trading, they received a letter from the Insolvency Service threatening to commence director disqualification proceedings against them.
Not only was the thought of an investigation by a government body terrifying, but the prospect of a ban was also unthinkable. With a second family business providing the family's only source of income, our clients knew that a ban had to be avoided at all costs. It was at this stage they contacted Suky Mann.
The challenge
Although the company had submitted a bounce-back loan ('BBL') application using overstated figures, Suky was confident that the allegation could be defeated. The crux of the defence was the circumstances giving rise to the application itself.
After taking the client's detailed instructions, it transpired that the incorrect application resulted from a genuine misunderstanding of the government support schemes available.
Our clients initially intended to apply under the Coronavirus Business Interruption Loan Scheme ('CBILS'). They collaborated with the company accountant and put together figures relating to its forecasted turnover, liquidity and funding needs per the perimeters of the Coronavirus Business Interruption Loan Scheme. After the CBILS application was submitted, our client was advised to apply for a bounce-back loan instead. The accountant advised our clients to use the projected figures from the Coronavirus Business Interruption Loan Scheme application. Our clients were not aware or advised that estimated figures (based on the facts of this case) could not be used, and they simply used the projected turnover figures to secure the loan.
The difficulty in this case was evidencing that the application was a genuine mistake and not a cynical and contrived means of circumventing the eligibility rules.
Our approach
Suky and her colleague Chloe Shilton were able to show that our client's action was justified. Despite the technical breach of the bounce-back loan rules, our client's actions could not be deemed a breach of their fiduciary duties. Suky's forensic approach was key in demonstrating that it was not in the public interest to continue with the investigation.
On receipt of our detailed representations, the Insolvency Service agreed to abandon the proposed disqualification proceedings against our clients.
As always, Suky's appreciation of the facts of the case and reluctance to adopt a "one size fits all" approach made the difference in this case. This task is always made easier when the client has full faith in her ability to deploy her expertise and ensure no stone is left unturned in putting forward a defence.
"Suky had turned the Insolvency case around successfully. I liked her approach and her take on the matter which seemed impossible at that time. She won the disqualification for my wife and myself. What a relief. A lot was at stake. Thank you Suky and Chloe and the rest of the team"
A satisfied client
Our thoughts
This case provides us with yet another reminder that the key to successfully challenging a director disqualification investigation is twofold: an appreciation of the unique facts of every case and an experienced and robust legal team with a proven record of success.
