Paying Himself Around Two Thirds of the Value of His Company’s Bounce Back Loan and Leaving it Unpaid at Insolvency Sees a Company Director Hit With a 6 Year Disqualification

This case involves a Bounce Back Loan obtained from HSBC and ultimately, for the reasons laid out below, saw the Company Director given a 6-year disqualification for the wrongdoing indicated.

close a limited company

The Statement of Affairs for this Company lists the Bounce Back Loan as a CBILS, not quite sure what that is all about, but just letting you know.

On 22 June 2020 Paul Burfutt (“Mr Burfutt”) caused HD9 IT Limited (“the Company”) to obtain a government backed Bounce Back Loan (“BBL”) totalling £32,687 and did not use at least £21,422 for the economic benefit of the business, contrary to the terms of the BBL.

In that:

  • In his questionnaire dated 05 September 2021 he stated that the Company’s last contract was terminated on 31 May 2020. Attempts were made to secure alternative contracts for the Company, and he was placed on the furlough scheme throughout.
  • In August 2020 he took a 3-month contract in a personal capacity having been unsuccessful in securing a Company contract.
  • On 22 June 2020 he submitted an application to the bank for a BBL in the sum of £32,687.
  • Within the BBL application he declared that the BBL would be used to provide economic benefit to the business and would be used wholly for business purposes and not personal purposes.
  • He stated in his questionnaire that a proportion of the BBL was utilised towards paying salary and ongoing business expenses. The remaining balance had been intended to improve the Company’s cash flow but was ultimately not utilised.
  • An analysis of the Company’s bank statements shows that the BBL of £32,687 was deposited in the Company’s bank account on 24 June 2020 and in the period 13 July 2020 to 21 August 2020 a total of £25,500 was paid to him.

At liquidation on 05 March 2021, the Company owed its creditors £60,899.40, including £9,216.00 owed to him and the £32,687 of the BBL which remains unpaid.