October 2022 Round-Up: The UK’s Latest Bankruptcy and Insolvency Statistics
This month we cover the insolvency stats for September 2022 and we look at three insolvency news stories. Including:
- the director of a Pembroke restaurant who was banned for seven years,
- a nurse who has been disqualified as a company director for ten years and;
- a suspended sentence for a Lincolnshire man for failing to follow his bankruptcy restrictions.
You can read last month’s statistics and stories here: Insolvency News and Statistics August 2022
Director of a restaurant banned for 7 years
Mr Abdul Kalam from Birmingham could not explain how his restaurant received over £400,000 in income. This, and a number of other factors, have led to Mr Kalam being disqualified as a director of a company for seven years starting on 30 September 2022.
Mr Kalam was the sole director of Choose Chilli Ltd, and ran Mehfil’s restaurant on Main Street in Pembroke’s shopping arcade until 2021. The Insolvency Service investigated Choose Chilli after the company went into voluntary liquidation in July 2021.
Over £400,000 in unexplained income
The investigation led The Insolvency Service to find some unusual finances. Mr Kalam had claimed £35,000 through the Bounce Back Loan scheme, £25,000 at the start of the COVID pandemic and an additional £10,000 in March 2021. Even with this support the company went into voluntary liquidation in July 2021.
After further investigation, it was found that both loans were immediately transferred into a personal bank account in Mr Kalam’s name. Mr Kalam was unable to prove that the loan was used to economically benefit or support Choose Chilli Ltd.
The Insolvency Service then discovered that Choose Chilli, in addition to the BBL money, had £178,000 income. Then a further £241,000 of income between December 2019 and July 2021. During this period the UK was in a state of lockdown or restrictions with many restaurants closed, Mr Kalam was unable to explain any of this additional income.
A combination of poor bookkeeping and misuse of the BBL scheme ensured that Abdul Kalam was disqualified as a company director for seven years.
10-year disqualification for nurse
Ms Monica Coyle has been disqualified for 10 years as a company director for falsely claiming £30,000 on the Bounce Back Loan scheme.
Ms Coyle is a former NHS nurse in Kilmarnock, who claimed her company turnover was significantly higher than reality. She claimed her business had an annual turnover of £130,000 in order to receive the £30,000 government loan, when in fact the company only was turning over £5,000 a year.
BBL loan for personal use
Following her false claim in May 2020, Ms Coyle spent £26,000 of the BBL for her own personal use. The BBL scheme was designed to give businesses support during the pandemic, not for personal use.
Ms Coyle was the director of Positive Pulse Limited, which went into Creditor’s Voluntary Liquidation in February 2022, owning £30,000 to the bank.
She did not dispute the disqualification for applying and accepting a BBL of £30,000 from the government. Ms Coyle will be banned from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the court’s permission for 10 years starting on the 16th of September 2022.
Suspended sentence for failing to follow bankruptcy restrictions
Mr Daniel Ross Patchett pled guilty in Lincoln Crown Court to breaking bankruptcy restrictions and was sentenced to 20 months imprisonment. Following being made bankrupt in February 2018 Mr Patchett continued to act on behalf of his previous company DRP Distribution Ltd. This is in violation of bankruptcy restrictions.
When someone is made bankrupt they are not able to create, manage or promote a company, or act as a director of a company. If these conditions are breached without express permission from a court it is a criminal offence. In addition, bankrupts need to declare assets to pay off some of their debts. Mr Patchett was in breach of a number of these conditions.
Continuing to manage a company following bankruptcy
In February 2018, Mr Patchett resigned as director of his business DRP Distribution Ltd and handed over the sole directorship to his wife. Despite the bankruptcy, he continued to manage the company, with investigations by The Insolvency Service discovering Mr Patchett had continued to manage business affairs at DRP.
Mr Patchett was also found to be deliberately concealing income to avoid making payments to creditors. At one point he even informed the Official Reciever that he could not make the £400 payment to his creditors, claiming he no longer worked at DRP Distribution, providing his P45 as evidence.
In actuality, he had paid himself £30,000 from the business, his wife £40,000 and taken an additional £28,000 out of the company.
Mr Patchett was sentenced on the 28th of September 2022 at Lincoln Crown Court to 20 months imprisonment, which has been suspended for 18 months. This included eight months for offences under section 11 of the Company Directors Disqualification Act and 12 months for offences under section 356 of the Insolvency Act.
England and Wales Monthly Insolvency Statistics
Company Insolvencies during September 2022
- There were 1,679 company insolvencies in September 2022, 16% higher than the previous year (September 2021)
- 1,379 CVLs in September 2022
- Compulsory liquidations were 6 times higher in September 2022 compared to September 2021
Individual Insolvencies September 2022
- There were 1,812 DROs in September 2022 and 535 bankruptcies
- There was a 5% increase in IVAs for the 3 month period leading up to September 2022 (7,188 on average) compared to 2021
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