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Directors Disqualified For Abuse of Bounce Back Loan Scheme

Written by Robert Moore Marketing Manager 20 January 2022

The directors of Scholars Academy Ltd based in Brighouse, West Yorkshire. Aamer Aslam  and Razwan Ashraf, have been disqualified for 11 and 10 years respectively according to a press release by the Insolvency Service.

The company Scholars Academy Ltd was a tutoring service for children aged 5 to 17. They applied for a Bounce Back Loan in May 2020 and provided an estimate of company turnover at £200,000.

Companies could make turnover predictions but they needed to have an annual income of more than £8000 in order to apply.  When the company went into liquidation it was found that it had a suggested income of just £7680

The company was given BBL of £50,000 in May 2020 and subsequently went into voluntary liquidation in January 2021. At the time of liquidation, the directors said they only owed £7,000. 

The Insolvency Service investigation found that as well as fraudulently inflating the company’s turnover, Aslam and Ashraf used the BBL funds to make monthly payments of £2000 to four individuals, one of whom was related to Ashraf.

Separately, Razwan Ashraf was also sole director of another educational company, Progress First Ltd, which had been incorporated in January 2018.

Ashraf applied for a BBL in May 2020 and fraudulently declared in the application form that annual turnover in 2019 was £200,000, when Progress’ bank statements showed that turnover was £38,973.

This resulted in Progress obtaining a BBL of £50,000 when it would only have been entitled to a BBL of £9,927.

As with Scholars, Ashraf claimed that the BBL funds were used to pay for company expenses. Regular payments were made to three individuals and no evidence has been produced to show that these payments were genuine business expenditure.

Ashraf has since repaid £35,000 to the liquidator to settle claims against him for the Progress BBL funds, and a further £25,000 in settlement of claims against both directors in relation to the BBL taken out by Scholars.

The Secretary of State accepted disqualification undertakings from both directors, with Aamer Aslam banned for 11 years, and Razwan Ashraf banned for 10 years.

The disqualification undertakings prevent both from directly, or indirectly, becoming involved in the promotion, formation, or management of a company, without the permission of the court.

Mike Smith, Chief Investigator for The Insolvency Service said:

Government loan schemes have provided a lifeline to millions of businesses across the UK – preserving their existence during the pandemic and protecting millions of jobs. As these cases show, The Insolvency Service will not hesitate to investigate and use its powers against those who appear to have abused the COVID-19 support schemes.

Category: Implications for Directors

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