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Covid Fraud and Business Interruption Loan Schemes

This blog talks about the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The government backed British Business Bank (BBB) estimates that a staggering 5% to 20% of the large businesses who have borrowed under CLBILS could default on their debt. Less surprisingly, it thinks 10% to 25% of the smaller CBILS borrowers and 35% to 60% of Bounce Back borrowers will become unable to pay back their debt.

The greater concern is that public law enforcement agencies do not have sufficient resources to manage the flow of new cases. Insolvency Practitioners (IPs) are one group that have been unable to access support from law enforcement. IPs have attempted to make reports to the criminal enforcement division of the Insolvency Service, only to be told that it is overwhelmed and has no resources to assist. IPs and financial institutions are now looking for a realistic option to address the criminality they uncover, and some are considering pursuing private prosecutions in an effort to mount a credible deterrent to the offending. Some of the benefits cited are:

  • private prosecutions offer some costs protection
  • protection against adverse costs
  • mitigating the risk of future litigation over the government guarantee
  • act as a deterrent

Directors should take these steps to protect themselves:

  • ensure that all directors have access to all relevant information
  • meet regularly as a board and keep careful notes of discussions held
  • record the reasons why key decisions were made, especially those dealing with the prospect of continued trading
  • include the impact on creditors with careful consideration where particular creditors receive different treatment to others (avoid creating an intended preference and taking account of good business reasons)
  • maintain a dialogue about the use of business interruption loans and how they will, in the directors’ view, continue to ensure the long-term viability of the company and be in the best interests of creditors
  • seek professional advice from those within the restructuring community if that particular skill set is not already within the board’s capabilities
  • maintain a day book of individual decision-making and thought processes in addition to the board meeting minutes

Our expert team is here to help you with any enquiry you have on CBILS and CLBILS at

About the author

Raymond Davidson

Raymond has been specialising in Forensic Accounting and Litigation work for over 30 years, is a Fellow of the Institute of Chartered Accounts in England and Wales and trained by the Academy of Experts to act as a Mediator.



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