FOI22/23-035 - Recoveries from misused Covid support
Published 18 January 2023
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Our ref: FOI22/23-035
Re: Freedom of Information Act 2000
Thank you for your email of 26 June in which you requested from the Insolvency Service:
I would like to know if The Insolvency Service have kept a record of any successful recoveries they have made in respect of directors of limited companies and individual bankrupts who have misused the various methods of pandemic related support.
Your request has been dealt with under the Freedom of Information Act 2000 (FOIA).
I can confirm the agency holds some of the information that you have requested and I have provided answers to your questions below:
There are a number of ways in which recoveries are made.
1) The Official Receivers acting as trustees and liquidators seek to realise assets in order to make distributions to creditors. Information about recoveries is recorded within individual case files. This information is held by the Official Receiver for the purposes of exercising their statutory functions pursuant to the Insolvency Act 1986. Official Receivers, when exercising their statutory functions under insolvency law, are officers of the court, and not public authorities as defined by the Act nor are they one of the listed public authorities in schedule 1 of the Act.
In the circumstances of this information, the Official Receiver is not acting as either civil servant or on behalf of the Secretary of State and is therefore not subject to the Freedom of Information Act 2000. We are therefore not obliged to provide this information.
You can read more about the role of a trustee or liquidator here: www.gov.uk/government/publications/the-functions-of-a-trustee-or-liquidator.
2) Former directors of insolvent companies or other third parties may voluntarily make repayments after an insolvency. Such payments can be recorded within individual case files held by the Insolvency Service (ie sections of the agency which are not Official Receivers), but our management information systems are not currently able to extract the data. You have not asked for actual figures, but if you had it is likely that the request would be rejected under section 12(1) of FOIA, because the cost of manually extracting the information would exceed the appropriate cost limit outlined in the FOIA. However we are working on making changes which may enable us to capture this information.
3) A compensation order may be made following either a civil or a criminal investigation, or a confiscation order may be made following a criminal investigation. To date, no such orders have been made following an Insolvency Service investigation into misuse of Covid-19 financial support schemes, although we expect that this will change over the coming year as more of these cases progress through to conclusion and sanction.
You can read about compensation orders in director disqualification cases here: www.gov.uk/government/publications/director-disqualification-a-guide-to-compensation-orders/a-guide-to-compensation-orders and in criminal cases here: www.sentencingcouncil.org.uk/explanatory-material/magistrates-court/item/fines-and-financial-orders/compensation/1-introduction-to-compensation.
You can read about confiscation orders here: www.cps.gov.uk/legal-guidance/confiscation-and-ancillary-orders-pre-poca-proceeds-crime-guidance.
We take abuse of all Covid-19 financial support schemes very seriously and understand the high level of public interest in the issue, and we hope to release figures about these areas of our work in future enforcement outcomes statistics.
If you are not satisfied with the response we have provided you and would like us to reconsider our decision by way of an internal review (IR), please contact our Information Rights Team at foi@insolvency.gov.uk or by post at:
Information Rights Team
The Insolvency Service
3rd Floor
Cannon House
18 Priory Queensway
Birmingham
B4 6FD
United Kingdom
You also have the right to contact the Information Commissioners Office (ICO) if you wish for them to investigate any complaint you may have regarding our handling of your request. However, please note that the ICO is likely to expect an IR to have been completed in the first instance.
Kind regards
Information Rights Team
The Insolvency Service