Background
Rio Property Maintenance Limited operated an office cleaning, maintenance and management business. In July 2020, its director, Enilson Antonio Vieira Da Silva, applied for the maximum £50,000 government-backed Bounce Back Loan, stating that the company’s 2019 turnover was £202,321. Yet accounts he had approved less than three weeks earlier recorded annual turnover of £83,844 and £81,300, while the company’s total bank receipts during the 2019 calendar year were only £125,873.95.
Even treating all those bank receipts as turnover, the company was eligible for no more than approximately £31,469, making the loan overclaim £18,531. The company made no cleared repayments, entered creditors’ voluntary liquidation in June 2022 with no assets and an estimated creditor deficiency of £124,884, and was later dissolved. The government paid Barclays £50,883.54 under its guarantee.
The Secretary of State sought disqualification and compensation under sections 6 and 15A of the Company Directors Disqualification Act 1986. Da Silva failed to comply with an unless order, was debarred from contesting the claim without permission, sought no permission, and did not attend the hearing.
The Court’s Holding
ICC Judge Barber found that Da Silva completed the loan application, understood that the company’s entitlement depended on its actual 2019 turnover, and ought to have known that the stated figure materially overstated that turnover. Although the court did not find dishonesty, it characterised his conduct as, at best, grossly negligent or incompetent to a very marked degree. The misrepresentation breached the trust placed in directors under the self-certified emergency lending scheme and rendered him unfit to manage a company.
The court imposed a 10-year disqualification order. It held that gross negligence or marked incompetence can justify a middle-bracket disqualification even without knowing, reckless or dishonest misconduct. The seriousness of the overstatement, the maximum loan sought, the resulting taxpayer exposure, the absence of any explanation or mitigation, and the need for deterrence supported a term at the top of that bracket.
The court also found a direct causal link between the improperly obtained excess loan and Barclays’ loss. It ordered Da Silva to pay compensation of £18,531 plus interest at 2.5% from 8 July 2020 to 29 June 2026, totalling £21,299.88, and costs of £5,573.01.
Key Takeaways
- A materially inflated turnover figure in a Bounce Back Loan application can establish misconduct and unfitness even when dishonesty is neither alleged nor found.
- Gross negligence or marked incompetence may warrant a middle-bracket disqualification; there is no automatic lower-bracket tariff merely because the misconduct was not knowing or reckless.
- A director must receive fair notice of the substance of the case, but the supporting evidence is read as a whole and need not use formulaic wording declaring the misconduct “serious.”
- Compensation may be ordered where the disqualifying conduct directly causes an identifiable creditor loss, and an unsupported assertion of impecuniosity does not prevent relief.
Why It Matters
The judgment confirms that substantial disqualification periods are available for serious carelessness in applications for public funds, not only for fraud or deliberate abuse. Context matters: the Bounce Back Loan Scheme depended on accurate self-certification during a national emergency, making a director’s failure to verify readily available turnover figures particularly serious.
It also illustrates the distinct compensatory consequences of disqualification proceedings. Where an inflated application produces a quantifiable excess advance that remains unpaid, the court may require the director personally to compensate the affected creditor in addition to imposing disqualification and costs.