Two property company bosses have been sentenced following an Insolvency Service investigation which found they had abused a £30,000 Bounce Back Loan, then folded their firm to avoid paying back the loan.

Matthew Christopher Wright, from Liverpool, was sentenced to 14 months imprisonment for each offence of fraud and of failing to tell the bank which had lent his company the money that the business was to be dissolved. The two sentences are to run concurrently, suspended for a period of 18 months.

Karl Thomas Mathers, also from Liverpool, received 10 months imprisonment, suspended for a period of 18 months, for failing to inform the bank that they had applied to dissolve the business.

Wright and Mathers were directors of Northgate Property Associates Ltd in Liverpool, which was incorporated in August 2013, and was used to collect rental income on a property the pair rented out.

The court heard that Wright applied for a £30,000 Bounce Back Loan on behalf of the company in May 2020. Under the rules of the scheme, the money had to be used for the economic benefit of the business.

Investigators discovered that two days after applying for the loan, the pair withdrew the full amount from the company bank account. They paid £21,500 into their joint bank account and £7,450 into Wright’s personal account. 

And the following day they moved £30,000 from their joint account into Wright’s mother’s bank account.

Shortly afterwards the couple withdrew around another £1,600 from the company to spend on a loan and other expenditure unrelated to the business.

Yet within six days of first applying for the Bounce Back Loan, the pair took steps to close down the company, and applied to Companies House to strike off Northgate Property Associates from the register.

Neither director informed the bank that they planned to dissolve the business, breaching a legal obligation to inform any lenders to whom the company owed money. 

When Wright and Mathers were sentenced, almost £29,000 was still owed towards the loan. The Insolvency Service continues to work towards recovery of the money.

Julie Barnes, chief investigator at the Insolvency Service, says: “Matthew Wright and Karl Mathers abused a scheme that was designed to offer genuine support to businesses through the pandemic. They cheated the taxpayer for personal gain before swiftly closing down their company. Their sentences serve as a warning that the Insolvency Service will take action against those who abuse the public purse.”

The two were sentenced by Her Honour Judge Pierpoint, who included 100 hours unpaid work and 15 days for a Rehabilitation Activity Requirement  – a measure which helps to address offending behaviour –  for each as part of their sentence.