Insolvency Service to get new powers to tackle unfit directors
By Michael Klimes 13
th May 2021 7:00 am
The Insolvency Service will be given stronger powers to investigate directors of companies that have abused Covid support schemes.
An update from the government shows it intends to close a legal loophole that allows dissolved companies to avoid repaying state loans.
The measures included in the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill are retrospective.
They will enable the Insolvency Service to also tackle directors who have inappropriately wound-up companies that have benefited from Bounce Back Loans.
Extension of the power to investigate also includes the relevant sanctions such as disqualification from acting as a company director for up to 15 years.
Source: UK Government
The Insolvency Service will be given powers to investigate directors of companies that have been dissolved, closing a legal loophole and acting as a strong deterrent against the misuse of the dissolution process.
The process will no longer be able to be used as a method of fraudulently avoiding repayment of Government backed loans given to businesses to support them during the Coronavirus pandemic
Extension of the power to investigate also includes the relevant sanctions such as disqualification from acting as a company director for up to 15 years. These powers will be exercised by the Insolvency Service on behalf of the Business Secretary.