For Placing Two Limited Companies, Each with a Bounce Back Loan, In Creditors Voluntary Liquidations the Director is Slapped with an 11 Year Ban After BBL Wrongdoing is Discovered

A couple more Bounce Back Loans have turned sour due to the actions and wrongdoing listed of the Company Director named below.

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Town Discount Limited (in Creditors’ Voluntary Liquidation)

Shahzad Arshad (“Mr Arshad”) caused Town Discount Limited (“TD”) to apply for a Bounce Back Loan (“BBL”) of £50,000 to which it was not entitled to and failed to show whether it was for the economic benefit of the company.

In that:

  • A business could apply for a BBL of between £2,000 and £50,000 subject to a maximum of up to 25% of turnover in the calendar year 2019.
  • The turnover figure was self-certified by the applicant.
  • The turnover figure required was that for the calendar year 2019 or where a business was established after 1 January 2019 it is their estimated turnover.
  • Businesses were required to use the loan only to provide economic benefit to the business, and not for personal purposes
  • TD was incorporated on 08 January 2020, however it did not commence trading until February 2020 and had no bank account until June 2020.
  • On 16 June 2020, he declared within the BBL application that TD had achieved annual (or estimated) turnover of £250,000 in the calendar year 2019.
  • The first transaction into TD’s bank account was the BBL of £50,000 on 18 June 2020.
  • Following receipt of the £50,000 BBL TD disbursed funds totalling £50,008 between 22 June 2020 and 24 August 2020 of which £16,000 was withdrawn for cash.
  • The balance of £34,208 was paid to trade and expense suppliers.
  • He was unable to provide evidence that these transactions were used for the benefit of the company.
  • Between 19 July 2021 and 18 October 2021 TD made 4 repayments totalling £3,549 towards the BBL.
  • On 02 December 2021 he in the absence of assets, placed TD into Creditors Voluntary Liquidation with a deficiency of £59,951 of which £46,735 is owed to the bank in respect of the BBL.
  • The balance of £13,216 is owed to the local council in respect of unpaid non-domestic rates.

Naz Accessories Limited (in Creditors’ Voluntary Liquidation)

Shahzad Arshad (“Mr Arshad”) caused Naz Accessories Limited (“NAZ”) to breach the terms of the Bounce Bank Loan (“BBL”) scheme by overstating NAZ’s turnover in order to obtain BBL funds of £50,000 when NAZ was entitled to a maximum of £24,583.

A business could apply for a BBL of between £2,000 and £50,000 subject to a maximum of up to 25% of turnover in the calendar year 2019.

The turnover figure was self-certified by the applicant. The turnover figure required was that for the calendar year 2019 or where a business was established after 1 January 2019 it is their estimated turnover.

NAZ’s financial statements for the year ending 31 December 2019 shows a turnover of £98,332. Based on this turnover, NAZ was eligible to borrow a maximum of £24,583.

He applied for a BBL of £50,000 on behalf of the company, stating in the loan application that NAZ’s turnover for 2019 was £200,000.

As a consequence, of his overstating the turnover, NAZ received a BBL of £50,000 which gave NAZ the benefit of £25,417 that it was not entitled to.

On 27 January 2022 he placed NAZ into Creditors Voluntary Liquidations with a deficiency of £46,667 owed to the bank, NAZ’s only creditor, in respect of the BBL.