Administrators of Arena Television are reportedly investigating an alleged fraud involving millions of pandemic loans, where government-backed loans were offered to businesses to help them deal with the pandemic, and are suing two of the directors for breach of fiduciary duty. More companies may be in a similar position as, according to the National Audit Office, it is likely that the level of fraud in the bounce back loan scheme ranges from £3.5bn to £4.9bn. Who can claim these ill-gotten gains?

Directors’ duties

Recent analysis by Begbies Traynor shows that more than half of UK businesses are carrying “toxic debt” that they might struggle to repay over the next 12 months. What if the company you are thinking of suing, or that is suing you, is one of them?

New restrictions contained in the Corporate Governance & Insolvency Act 2020 now in force severely impact the steps creditors can take to get payment of an undisputed debt owed by a company.

Creditors cannot now use statutory demands to threaten that a company will be wound up if it does not pay what is owed. This is because any statutory demand made between 1 March 2020 and 30 September 2020 will be void.