This is the type of case the Criminal Investigators over at the Insolvency Service are looking for, and such cases usually end up in court. The reason is that the Director named has breached the Companies Act 2006 by not informing his BBL Lender about the dissolution.
On 27 June 2020 Daniel Ryan Jones (‘Mr Jones’) applied for and obtained a government-backed Bounce Back Loan (‘BBL’) of £50,000 for Danny Evans Engineering Ltd (DEE’) by providing false or knowingly inaccurate information regarding DEE’s turnover in 2019, thereby causing it to obtain £41,756 to which it was not entitled.
Mr Jones failed to ensure that the proceeds of the loan were used in their entirety for the economic benefit of the business as required under the terms of the BBL scheme.
In that:
Obtaining a BBL
- The BBL scheme permitted a loan of up to 25% of a business’ turnover in the calendar year 2019 (or estimated turnover if it had been established after 01 January 2019), to a maximum of £50,000.
- DEE was incorporated in August 2019 and the first transaction on its bank account was on 17 September 2019.
- Its bank statements record income of £9,619 to 31 December 2019, which would have equated to income of approximately £32,979 for the year.
- This income would have entitled DEE to a BBL of no more than £8,244.
- On 27 June 2020 Mr Jones completed an application form for a BBL from DEE’s bank, self-certifying that its turnover in 2019 was £285,000 and requesting a loan of £50,000.
- Mr Jones has failed to provide any documentation to support the level of turnover claimed in the application.
Disbursal of the BBL
- The terms of the BBL scheme required the proceeds to be used solely for the economic benefit of the business.
- Immediately before the receipt of the BBL the bank account balance was £11 cr.
- On 29 June 2020 the BBL was paid into DEE’s account.
- Between 30 June and 26 August 2020 payments were made to an unknown bank account and to 3 third parties, totalling £37,350, a further £12,500 was withdrawn in cash.
- No income was received and by 26 August 2020 the balance on the account was £27cr.
- No documents have been provided to evidence that any of these payments were for the economic benefit of the business.
- The full amount of the BBL remains outstanding.
Mr Jones caused DEE to be dissolved and struck off the register in breach of the requirements of the Companies Act 2006 and without notifying DEE’s bank of the dissolution application.
In that:
- On 10 September 2020 Mr Jones signed a notice of application that DEE be struck off the register and dissolved.
- The application included a declaration that none of the circumstances described in sections 1004 and 1005 of the Companies Act 2006 applied.
- Provisions of those sections include that dissolution is not permitted where a company has traded or engaged in any other activity in the 3 months prior to the application.
- The BBL application was made on 27 June 2020, which was within 3 months of the dissolution application and the proceeds were disbursed in the period to 26 August 2020.
- Section 1006 of the Companies Act 2006 requires the person who made the application for dissolution on behalf of DEE to give notice and provide a copy of that application to DEE’s creditors (the bank is the sole known creditor) within 7 days from the day on which the application was made (i.e. by 17 September 2020).
DEE’s bank has confirmed that it did not receive any notification of the dissolution and remains a creditor for £50,008. DEE was dissolved on 08 December 2020.
