Insolvency Department Takes Action Against Companies Abusing COVID-19 Financial Support

Raashid Khan (26) was disqualified as a director for 12 years after fraudulently claiming £ 50,000 under the Bounce Back Loan Scheme (BBLS) before transferring the full amount from the company’s account just days before his business went into administration.

Khan, from Birmingham, was director of Ikandy Wholesale Ltd, which bought and sold bulk goods including fireworks and fresh meat.

Although the accounts of Ikandy Wholesale’s business were frozen after the business was confirmed to shut down, Khan forged a document to convince his bank that the liquidation order had been revoked. This allowed him to transfer around £ 70,000 out of the account, including a £ 50,000 Bounce Back loan, which he had secured less than two weeks previously.

Since February 2021, the Insolvency Department has successfully asked the courts to liquidate five limited companies involved in the abuse of government loans, introduced to help businesses during the pandemic.

These include a furniture retailer in Manchester and two Glasgow-based companies, for which no legitimate business activity has been identified since at least January 2020.

Two of the companies obtained Bounce Back loans, at least one of which was obtained on the basis of false information. One of the Glasgow-based companies has also secured two coronavirus business interruption loans totaling £ 240,000 based on false information.

Dave Elliott, Chief Insolvency Investigator, said:

The Bounce Back loan program has been made available to help support businesses during the pandemic. It is scandalous that some directors have tried to abuse this support, and the steps we have taken show that we take this issue very seriously.

I urge anyone who suspects that a company has been involved in this type of abuse, or has information about directors who have fraudulently obtained commercial support from Covid, to alert us immediately.

The Insolvency Department will also soon have additional powers to investigate Bounce Back loan fraud in cases where the company has been dissolved.

The Credit Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, currently before Parliament, if passed, will give the Insolvency Department the power to investigate and, if necessary, take steps to disqualify directors of companies that fraudulently claimed bounce loans but have since been dissolved. This power will be retroactive to allow the investigation of behaviors that took place before the coming into force of the law.

If wrongdoing or professional misconduct is found, directors may face penalties, including a ban of up to 15 years, and potentially criminal prosecution.

If you suspect that a business owner or manager has behaved fraudulently and abused public loans, you can report it to the Insolvency Department.

Notes to Editors

Misconduct: information about companies and officers

Raashid Khan is from Birmingham and his date of birth is August 1995. He was a director of Ikandy Wholesale Ltd (company number 09908283).

Global Trading Europe (GTE) was based in Leicester and sold furniture from premises in Manchester under the trade name “Unique Homes”. In fact, the company had not traded since early 2019. Company director Dariusz Zemanczyk from Poland claimed a rebound loan of £ 50,000 based on fraudulent accounts. GTE was liquidated by the Manchester High Court on March 16, 2021.

Glasgow-based Balgownie Wholesale Distribution Services Ltd has secured two coronavirus business interruption loans totaling £ 240,000 by providing false and misleading information. MGH Properties Ltd, also based in Glasgow, has secured a £ 50,000 Bounce Back loan. The Insolvency Service’s investigation identified numerous links between the companies and the fictitious transactions appearing in the bank statements that were produced to potential lenders. Balgownie’s website stated that it provides services including distribution, international logistics and wholesaling and is one of the leading international suppliers of high-quality inventory to the trade and the public. However, the website content appeared to have been cloned from that of a reputable company. It was liquidated by the Edinburgh Court of Session on April 1, 2021. MGH previously operated as a hotelier but ceased to participate in this activity around January 2020. It was liquidated by the Edinburgh Court of Session on April 1st.

In February 2021 Liquor World (Scotland) Ltd (company registration number SC472891) was liquidated in the Edinburgh Court of Session after obtaining loans based on false and misleading information, including a Bounce loan. Back of £ 50,000.

Also in February 2021, Fortress Restructuring Ltd (company registration number SC595429) was liquidated in Edinburgh Sessional Court after an investigation found the company had secured a £ 50,000 return loan on the basis of false and misleading information. The investigation also found examples of misleading marketing material regarding the company’s insolvency-related services.

About the Insolvency Service

The Insolvency Department has the authority to conduct confidential investigations of limited liability companies when information we receive suggests corporate abuse -company-investigations-what-we-do / business-inquiries-what-we-do

Where public limited companies have initiated formal insolvency proceedings in England, Wales and Scotland, the Insolvency Department has the capacity to investigate the conduct of former directors: / government / publications / insolvent-company-investigations / insolvent-company-investigations-what-we-do

More information on the work of the insolvency service and how to complain about financial misconduct.

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