ICSM News: busted director of food print firm took £50K Covid loan but had zero sales

By Harry Mottram: The Insolvency Service have busted a company director and banned him for breaking the rules over Covid loans during the pandemic crisis. Leo Bernard Stanley was a director of Ink Edibles Ltd based in Denton, Manchester has been banned for 10 years for wrongly taking a BBL of £50,000 via HSBC on 18 January 2021. Despite the loan the firm filed dormant accounts for the periods ending 31 May 2019 and 31 May 2020 meaning the company had no sales.

The Insolvency Service report said: “Mr Stanley stated Ink Edibles did not start trading until 1 June 2020 and therefore Ink Edibles did not meet the criteria for the Bounce Back Loan (BBL). Records show sales transactions started in June 2020 and turnover in the period from 1 June 2020 to 31 March 2022 totalled £4,682.65.”

Print Week – the trade publication for the industry – reported at length on the case at https://www.printweek.com/content/news/director-disqualified-after-covid-loan-support-given-to-dormant-firm

Their chief reporter Jo Francis penned: “The firm’s product range included personalised sweets, biscuits and novelty toast printed with edible ink. The BBL criteria required borrowers to declare that their business was actively trading on 1 March 2020 and had been adversely impacted by the Covid-19 pandemic. Stanley’s application for a £50,000 loan stated that Ink Edibles’ turnover or estimated turnover for calendar year 2019 was £200,000.”

She also noted: “Ink Edibles went into creditors’ voluntary liquidation on 13 April 2022. Of the £50,000 loan more than £32,156 remains outstanding. The liquidator was able to recover £15,000 from the director. As a result of his actions Stanley has been banned from being a director for 10 years, with the ban taking effect on 27 December 2023.”

Ian Carrotte of ICSM said the system of awarding loans was ‘an open invitation to fraudsters’ as few if any checks were made on applicants while genuine firms struggled to get through the crisis. He said: “ICSM understood from the Government’s statistics that £1.7 billion pounds had been flagged up as fraud, with little likelihood it would be recovered. The Covid crisis showed a willingness for fraudsters to game the system with very few being brought to book.”

The scandal has been compounded by the fact the tax payer guaranteed the loans meaning the banks who in many cases agreed to the loans knew they would be paid one way or another. While the government have made efforts to retrieve some of the lost cash Labour who are expected to form the next administration later this year have announced a Covid Corruption Commissioner would take on the job of tackling Covid era corruption and fraud.

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ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com