The Insolvency Service is continuing to investigate suspected fraud in relation to the Bounce Back Loan Scheme (“BBLS”). Directors and former directors of companies which obtained loans they were not entitled to under the terms of the BBLS will continue to come under investigation by the Insolvency Service and face possible prosecution where fraud is suspected.

The Company Director Disqualification Act 1986 (“CDDA”) provides under section 6 a duty for the court to disqualify directors where the company has become insolvent or was dissolved without becoming insolvent and the court is satisfied that the conduct of the director makes them unfit to be concerned in the management of the company.

The CDDA regime is not looking for perfection from directors but is rather looking at situations where the public need protection from a director who is not acting with commercial morality.

The National Audit Office (“NAO”) reported in 2021 that due to the speed at which the BBLS was implemented there were not sufficient anti-fraud measures and proper checks and balances in place. Over 4.5 million loans were advanced with an approximate value of £47 billion.

The government’s own data estimates that some £1.65 billion of loans under the BBLS were obtained as a result of fraud. As a result huge sums are being paid by the government to lenders under the BBLS.

In April 2024 the Insolvency Service published details of actions taken against directors to tackle “covid loan misconduct” reporting that a total of 831 company directors were banned in 2023-24 for Covid support scheme abuse, up 80% on the previous year. The average length of the director disqualification period relating to Covid misconduct in 2023-24 was almost 10 years, the maximum disqualification period available to courts being 15 years. This in itself shows how serious the issue is being taken.

In the case of Secretary of State v Ghimpu [2023] EWHC 2084 (Ch) a £50,000 bounce back loan was taken out where turnover had been exaggerated, ICC Judge Briggs ordered a 13 year disqualification taking into account the fact that the monies received had been dissipated in relatively short order and that there had been a personal benefit to the director. Notwithstanding the fact that the so-called damage was £50,000 the case of R v Dag and Dagistan [2023] EWCA 636 was cited, taking the approach that the country at the time when the loans were being made was ‘vulnerable’ thereby justifying a higher demand of honesty from loan applicants.

Cognitive Law have solicitors experience in representing directors in disqualification proceedings as well as applying for directors to be given leave of the court to act as directors notwithstanding a disqualification, should you wish to discuss any issues arising from the above please contact me on

The above is not intended to be regarded as advice or to be a comprehensive guide to the matters referred to, and legal advice should always be sought.