Over-egging turnover for a Bounce Back Loan then winding up the company is something the Insolvency Service are used to seeing, and here is the story of another businessman who did just that and ended up with a 7 year disqualification.
On 7 May 2020, Johnathan Paul Ronald Rapley (“Mr Rapley”) caused or allowed Willow and Oak Bespoke Ltd (“Willow”) to apply for a Bounce Back Loan of £50,000 when he knew or ought to have known that Willow was not eligible for at least £35,000 of the loan.
In addition Mr Rapley caused or allowed the majority of the funds from the loan to be used for the personal benefit of himself and his co-directors and not to provide economic benefit to Willow, in that:
Willow commenced trading in November 2019.
The Bounce Back Loan scheme was aimed at small and medium sized businesses to enable them to borrow between £2,000 and up to 25% of their turnover; up to a maximum of £50,000.
Between 18 November 2019 and 6 May 2020 (approximately 6 months); £63,292 was paid into Willow’s bank account including £24,000 from the directors, £10,000 via Covid support and £29,292 from trade customers.
Based on the income figures between 18 November 2019 and May 2020, 25% of Willow’s annual turnover can be calculated to be £14,646, therefore the amount of Bounce Back Loan to which Willow would have been entitled was £14,646.
On or about 7 May 2020, Mr Rapley caused or allowed Willow to apply for a Bounce Back Loan of £50,000 which was at least £35,000 in excess of the amount to which it would have been entitled.
On 7 May 2020, Willow received £50,000 into its bank account in relation to the Bounce Back Loan.
Between 7 May 2020 and 18 November 2020 (the date Willow entered liquidation) payments from trade customers totalled £24,285; resulting in total receipts of £74,285 (including the Bounce Back Loan).
Between 7 May 2020 and 18 November 2020; £71,585 was paid out of Willow’s bank account of which £50,250 was paid to the directors (including £13,500 on 28 or 29 September 2020) and £21,335 to trade & expense creditors.
On 29 September 2020 the directors had an initial meeting with the Insolvency Practitioner when Willow was deemed to be insolvent.
The report prepared for creditors prior to the date of liquidation stated that Willow ceased trading on 23 September 2020 although there was a receipt into the company bank account on 25 September 2020 of £17,660.
A debt of £50,000 in respect of the Bounce Back Loan is shown in the Willow’s Statement of Affairs.
The Bounce Back Loan of £50,000 has not been repaid.