Asset Solutions July 2022 Round-Up: The UK’s Latest Bankruptcy and Insolvency News & Statistics
This month we cover two cases of abused Bounce Back Loans (BBL) and the latest update surrounding the Horizon postmaster scandal. We also cover insolvency statistics from June 2022.
You can read last month’s statistics here: Insolvency News & Statistics June
Bounce Back Loan used on drinking and gambling
The owner of an Indian restaurant in South Wales went bankrupt after spending most of £43,000 of his BBL and a financial aid grant on drinking and gambling.
The Cardiff-based restaurant owner, Rathudi Mahesh Manglanand, was a sole trader who ran the Indian restaurant Chutney Roti.
Acquiring the loan
Due to COVID-19, Manglanand was forced to close his restaurant. However, he managed to get a £25,000 grant from his local council and in May 2018 he claimed an £18,000 BBL. Manglanand did not reopen his restaurant with the money provided by COVID-19 financial schemes.
Filing for bankruptcy
Just over a year after receiving the financial aid for his business Manglanand filed for bankruptcy in July 2021. This prompted The Insolvency Service to investigate Manglanand and find where the money had gone from his financial aid.
He would admit that the money had been used on drinking and gambling with him estimating that he lost £30,000 in the space of a year on gambling alone. Manglanand also confessed to the investigators that his business was not operating during the period for which he had taken the financial aid.
Bankruptcy restrictions issued
Rathudi Manglanand’s 9-year bankruptcy restriction began on the 20th of June 2022. Currently, Manglanand’s Official Reciever is looking into what assets he has available to recover the COVID-19 support funding.
Find out about other instances of BBL abuse: Financial consultant disqualified for abusing BBLs
Financial support for postmasters who exposed Horizon
Between 2000 and 2014, more than 700 post office operators were prosecuted based on information from the Horizon IT system, which was installed in Post Office branches and maintained by Fujitsu.
For many, it resulted in bankruptcy, forcing them into an IVA or DRO.
However, in late 2019 a high court judge ruled that Horizon’s system was unreliable due to a number of “bugs, errors and defects” that lead to more than 700 unsafe convictions for theft, fraud and false accounting.
The Insolvency Service taking action
The Insolvency Service has continued seeking information from postmasters that have been made bankrupt due to the Horizon IT system.
Anyone who comes forward may have their case reviewed if they believe their bankruptcy was due to miscarriages of justice.
Discover more about The Insolvency Service: What does The Insolvency Service do?
Most recent update
Justice is finally being served for those who are successful under the Historic Shortfall Scheme (HSS), which was introduced in 2020, as they are expected to finish the compensation by the end of 2022.
Almost two-thirds of eligible claimants to the Historical Shortfall Scheme have now received offers and a £19.3 million interim package has been confirmed by the government. This money will go towards the postmasters who played a pivotal role in exposing the Post Office Horizon Scandal.
Grocer abuses the maximum Bounce Back Loan (BBL)
A grocer from Northwest London has been disqualified for 10 years after abusing a £50,000 BBL.
The grocer and sole director of Al-Amir Ltd, Abbas Abo Kifayah inquired about a BBL in August of 2020. The loan was intended to help his grocers and butchers business bounce back from the effects of COVID.
Failing business
Less than a year later, after receiving the maximum allowance for the BBL, the company went into creditors’ voluntary liquidation in July 2021. This would lead the company to be investigated for believed fraudulent activities.
Investigators find fraudulent activities
It wouldn’t take long for The Insolvency Service to find that Abbas Kifayah exaggerated the company’s turnover to secure a higher value loan than his company would be entitled to.
They found that once the £50,000 loan reached the account for Al-Amir Ltd, over £43,000 was transferred into Kifayah’s personal bank account. Then around £2,250 was withdrawn in cash and over £3,000 was handed to a third party.
As part of their research, The Insolvency Service would question Kifayah directly. Kifayah tried to argue that £12,000 of the Bounce Back Loan was used to pay backdated salary they were owed. The investigators of his case couldn’t find any indication of him using the money to aid the company.
Disqualification
Abbas Kifayah has received a 10-year disqualification which means they cannot be directly or indirectly involved in the promotion, formation or management of a company, without the permission of the court. This disqualification was made effective from the 21st of July 2022.
England and Wales: Monthly Insolvency Statistics
Company Insolvencies during June 2022
- There were 1691 registered company insolvencies in June 2022:
- 1456 CVLs
Individual Insolvencies during June 2022
- There were 1815 DROs and 471 bankruptcies in June 2022
- The number of DROs was 28% higher than in June 2021 but 14% lower than in June 2019
If you are worried about debt, bankruptcy or possible insolvency, contact Asset Solutions today at 0800 689 3861. Our experienced team members provide unrivalled assistance to individuals throughout the entire insolvency process and help to stop bankruptcy. We understand that anyone facing problem debt is likely to feel overwhelmed and intimidated. That’s why we’re here to support you throughout the process and help you achieve the best results possible for your situation. Contact us today for more information.
