Successfully Challenging An Insolvency Service Director Disqualification Bounce Back Loan Investigation

Altion Law successfully supported a client who was being investigated by the insolvency service for wrongdoing and was facing director disqualification actions as a result of taking a Bounce back Loan. The client successfully challenged the Director Disqualification action with Altion Law’s assistance.  With Altion Law’s assistance, the client was able to provide the answers and information the IS were looking for and the investigation was closed.

• Client was a Director of a company providing consultancy services, but in 2018/19 for approximately a year, the company did not trade as the client took a paid role as an employee through another company so the company was registered as dormant during this period.
• In around January 2020 the client looked to set up a new business dealing in clothing, and decided to use the same limited company  for the new business rather than to incorporate a brand new one. In around February 2021, when the business was struggling, following the Covid pandemic, the company applied for and obtained a bounce back loan of £50,000, working on projected income for the year ahead, rather than on a previous year’s turnover. Clients reasons were that the company had been dormant for most of the previous year, and this was a new business, albeit under the same limited company as before.
• The Insolvency Service carried out an investigation into the value of the Bounce Back Loan sums applied for.
• Altion Law assisted client –
  • There is no legal definition of the term ‘established’, so there was potentially been a misinterpretation of the requirements but the client could evidence the change in business model between the previous consultancy work, and the more recent clothing business the company conducted at the time of application.
  • Client could justify the projected income stated in the bounce back loan application.
  • Client confirmed that the accountant advised that the company would be registered as dormant whilst she was working as an employee for another company and accountant advised continuing the new business within the old limited company, as opposed to setting up a new limited company due to costs.
  • The company used the bounce back loan sums wholly and completely for the economic benefit of the business and had evidence to show this.
  • Altion Law assisted the client in completing questionnaire and responses to Insolvency Service
• Insolvency Service eventually closed their investigation as client had provided sufficient documents to clarify that the company was eligible for the BBL.
• The whole episode caused the client so much stress that they were hospitalised for 24 hours due to a stress related illness leading to her seeking legal support.
• The information the client provided to the IS initially in January 2023 wasn’t enough for the IS to close the investigation.
• After Altion Law’s involvement the client was able to provide the answers and information the IS were looking for and the investigation was closed.