Barclays steps up fight with Covid loan fraudsters amid surge in number of firms going bust
A push by Barclays to claw back millions of pounds from Covid loan fraudsters spurred a surge in the number of companies forced to wind up last month.
Compulsory liquidations climbed to 242 in October, up from 210 in September and just 53 a year earlier.
It was the highest number since before the pandemic, during which government support schemes and bank-payment holidays offered struggling businesses a lifeline.
Compulsory liquidations climbed to 242 in October, up from 210 in September and just 53 a year earlier
The Insolvency Service said the rise was partly caused by ‘a large number of petitions’ from one bank, Barclays, which issued 45.
But there was also a broader increase in the number of firms going bust.
The Mail on Sunday revealed earlier this year that Barclays has enrolled a litigation firm to claw back money from around 100 Bounce Back Loan (BBL) borrowers so far identified as being suspected of fraud.
Barclays issued 345,006 loans worth £10.8billion under the Government’s backed BBL scheme, but it is estimated that £259million was siphoned off by criminals.
Companies can face compulsory liquidation when creditors such as banks petition for them to be wound up.
It does not mean those companies are suspected of fraud. But Barclays’ pursuit of fraudsters increased the overall number of companies it targeted.
A spokesman for the bank said: ‘Barclays looks to support customers who are facing financial difficulty, including those who borrowed under government schemes.
‘However, in certain circumstances, including where there appears to be a misuse of funds, formal recovery action may be taken to recover taxpayers’ money.’
The official figures also showed company insolvencies overall – including voluntary winding up, administrations and restructuring deals known as company voluntary arrangements – rose by 1,948 last month, 38 per cent up on last year.