27/10/2021
Four directors banned for abusing Covid-19 loans
Ruby Flanagan,Reporter, Accountancy Daily
26 Oct 2021
A director has been banned for nine years and three more received extended bankruptcy restrictions after fraudulently collectively claiming £100,000 from the Bounce Back Loan (BBL) schemeThe Insolvency Service has banned cleaning company director Rafael Henrique Scher, 38, for nine years after an investigation found that nearly he had claimed £30,000 from the bounce back loan scheme after his company was insolvent.The Insolvency Service also announced the eight-year extension to bankruptcy restrictions for takeaway owners Mujeebullah Khan, 34, and Muhammed Omair Javaid, 33 who applied for a loan of £50,000 after they had sold their business, and Malcolm Wilks, 57, who applied for a loan of £19,000 after his pub had entered an individual voluntary arrangement (IVA).Scher was the sole director of N&S Solutions Ltd which was incorporated in 2018. The company entered administration in August 2019 with debts of around £150,000, it then later entered liquidation on 23 June 2020.The Insolvency Service investigation found that Scher used his insolvent business to apply for the loan which he then used to pay £29,940 to a single trade creditor. It was found that Scher had ignored other creditors who had sizable debts and ignored the company’s tax liabilities which amounted to over £94,000.Khan and Javaid owned the Chunky Chicken takeaway in Nottingham until 2019 when the due sold the business. The investigation from the Insolvency Service found that Khan had applied for the loan in the name of his sold business and used the money to repay a business creditor and who was also a relative of Javaid.Both Khan and Omair Javaid made themselves bankrupt on 24 May 2021, citing debts of over £200,000 which included the £50,000 bounce back loan.Wilks ran the Royal Oak pub in Nuneaton since 2014 and at the start of the Covid-19 pandemic, the pub closed for lockdown and Wilks entered into an individual voluntary arrangement (IVA) and began to claim Universal Credit.The pub later reopened and traded for a few hours a week until it finally closed in November 2020 due to the reintroduction of Covid-19 restrictions.On 11 November 2020, Wilks received a loan that he claimed through his business and a day later, the supervisor of his individual voluntary arrangement terminated the agreement and confirmed to the Insolvency Service that Wilks had only made 2 repayments.The Insolvency Service investigation found that Wilks had transferred £17,000 of the loan to his personal bank account where he paid £4,100 to an ex-girlfriend, spent £1,120 on online gambling, and withdrew £3,500 in cash which cannot be accounted for.Only £6,500 was allocated as wages for himself to cover the period when he wasn’t working.It was also found that Wilks had also received £1,100 in business rates refunds in December 2020, just weeks before declaring himself bankrupt, and received a further £10,500 in later weeks but failed to disclose this to the Official Receiver.Scher signed a disqualification undertaking which began on the 25 October 2021 which means he is unable to act as a company director for nine years, Khan, Javaid and Wilks signed bankruptcy undertakings that extend their restrictions for 8 years which means they are limited to what credit they can access, as well as not being able to act as a company director without the permission of the court.Alan Draycott, the Deputy Official Receiver, said: ‘The Government loan schemes have provided a lifeline to millions of businesses across the UK – helping them to continue trading during the pandemic and protecting millions of jobs.‘As these three cases show, the Insolvency Service will not hesitate to investigate and use our powers against those who abused the Covid-19 support schemes.’
