Administrators banned for abusing the dissolution procedure
The four directors were disqualified after they all got bounced loans before dissolving their companies to avoid paying off their debts.
In the most recent case, Sirfraz Ahmad of Leeds was disqualified for 10 years after he overstated his turnover to secure a higher bounce-back loan he was not entitled to.
Instead of using the government guaranteed loan to support the business, Food Box Leeds Limited, Sirfraz Ahmad wasted £25,000 paying off his family members.
Sirfraz Ahmad joins Max Hadley, Lewis Wright and Jake Joynt on the disqualifications register after the Insolvency Service used new powers to crack down on unscrupulous directors who dissolve companies to avoid paying their debts.
The Insolvency Service has the power to investigate directors of companies that enter any form of insolvency, including administration and liquidation. The insolvency department may also be tasked with investigating active businesses where there is evidence of wrongdoing.
The Rating (Coronavirus) and Disqualification of Directors (Dissolved Companies) Act, which came into force in December 2021, extends the investigative powers of the Insolvency Service, on behalf of the Business Secretary, to directors of dissolved companies .
If misconduct is found, directors can face penalties, including being disqualified as company directors for up to 15 years or, in the most serious cases, prosecution.
Business Secretary Lord Callanan said:
The government has provided unprecedented support to businesses to help them through the pandemic, but unfortunately a minority of people have abused this support for personal gain.
We have made it clear that we will not tolerate those who seek to defraud the taxpayer, which is why we have introduced strict new powers which have allowed the Insolvency Service to disqualify directors for dissolving their companies, in order to avoid repaying their bounce loans.
Consultant Lewis Wright received a £50,000 loan in June 2020 after his business had gone out of business the year before. Lewis Wright was given the maximum loan amount after pumping up his turnover before paying himself just over £47,000. He is disqualified for 12 years.
Max Hadley, director of Prestige Building Works and railway engineer, received a 10-year ban after securing a £20,000 repayment loan before spending £18,000 on unrelated payments to the construction company.
And Jake Joynt received a 7-year disqualification after being given a £15,000 bounce loan before spending £13,000 of it for personal use.
The four directors are prohibited from involving themselves directly or indirectly in the promotion, incorporation or management of a company, without the authorization of the court.
The Insolvency Service is considering recovering loan repayment funds using statutory powers to seek compensation orders against administrators, if appropriate.