The fallout from the bounce back loan (BBL) scandal continues, as the Guardian reports that more than half of all director disqualifications in the UK between 1 April 2022 and 30 June 2023 were linked to abuse of pandemic support schemes, and predominantly BBLs. Around a quarter of UK businesses are thought to have benefitted from a BBL. In one particular case, 11 linked companies claimed £500,000 between them, with the funds being transferred to entities in Hong Kong. The companies have since been wound up and the Official Receiver will no doubt face an uphill struggle to recover the monies which have been moved outside the jurisdiction.

The Insolvency Service has so far disqualified 752 directors for abuse of pandemic support schemes, but has prosecuted just nine directors for offences related to BBL abuse. The Insolvency Service is reportedly continuing to pursue criminal prosecutions in more cases, which take longer to reach fruition. Meanwhile it remains to be seen how effective the new compensation orders (introduced by legislation in late 2021) will be in relation to directors who fraudulently claimed BBLs before dissolving their companies. In many cases, it is conceivable that compensation orders could simply result in bankruptcy for disqualified directors who frittered away the government-backed loans.

While the repercussions continue, the government has revised its estimate of the losses due to abuse of the BBL scheme down to £1.1bn (from £4.7bn previously) – some much needed good news in what is otherwise a sorry tale of the well-intentioned but poorly executed BBL scheme.