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£50K Bounce Back Loan Misuse Results in Business Director’s Curfew

Published by Chirag
Published Date: August 30, 2023

In a notable case, a company director faces a curfew and a ban from business activities after exploiting a £50K bounce back loan scheme and intentionally dissolving his company to evade repayment obligations.

Ivan Hristov Fratev, a 57-year-old Bulgarian national, has been prohibited from managing businesses for a span of six years. This penalty was imposed upon him for illicitly securing £50,000 for his construction company, blatantly violating the loan scheme's regulations.

Case Verdict: Director's Consequences for Misusing Loan Scheme

The legal action culminated in Fratev receiving a two-year suspended sentence and a four-month electronically tagged curfew, delivered by the Snaresbrook Crown Court on June 23, 2023. In addition to the business ban and suspended sentence, a 15-day rehabilitation activity requirement (RAR) was also included as part of his sentence.

Fratev served as the exclusive director of BI&F Ltd, a Chingford-based enterprise that operated in the construction, security, and extermination sectors from its location on Alpha Road. Established in August 2019, the company had not filed any financial statements due to its relatively short existence.

£50K Bounce Back loan Fraud

In May 2020, Fratev made a request for the maximum amount available under the £50,000 bounce back loan scheme, intended to provide financial relief to businesses grappling with pandemic-related challenges. Astonishingly, a mere two weeks after the loan was deposited into the company's bank account, Fratev initiated the dissolution process of BI&F Ltd. What raised eyebrows was that he neglected to inform the bank that had facilitated the loan. Concealing plans to dissolve a company without notifying creditors is a criminal offense.

Fratev's actions came under scrutiny due to the authority granted to the Insolvency Service in December 2021. This power enabled investigations into directors of dissolved companies suspected of strategically closing down their operations to evade repayment responsibilities for Covid-19 support loans. Several similar cases have been popping up and strict actions are being taken against such directors.

Insolvency Service's Perspective: Upholding Accountability and Taxpayer Trust

Peter Fulham, the chief investigator of the criminal investigation team at the Insolvency Service, emphasised the importance of responsible utilisation of Covid-19 financial support schemes. He highlighted the accountability of directors who exploited such initiatives, undermining the taxpayer's trust.

Fratev's punishment, including a suspended prison sentence, curfew order, and a six-year disqualification from business activities, underscores his dishonest behavior and serves as a stark warning to others who might contemplate similar actions.

The disqualification order for Fratev officially commenced on June 23, 2023.

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