Re Rio Property Maintenance: 10-year disqualification for inflated bounce back loan turnover

A director who overstated his company's turnover to obtain a £50,000 bounce back loan (BBL) has been disqualified for 10 years, in a judgement that departs from a recent decision on how such cases should be pleaded and sentenced.

In Secretary of State for Business and Trade v Da Silva (Re Rio Property Maintenance Ltd) [2026] EWHC 2460 (Ch), ICC Judge Barber also made a compensation order under section 15A of the Company Directors Disqualification Act 1986. The defendant, debarred from defending after breaching an unless order, did not attend the hearing.

The company, an office maintenance business, applied for the loan in July 2020, stating 2019 turnover of £202,321. The defendant had approved accounts less than three weeks earlier showing turnover of about £83,800 and £81,300 for the two preceding financial years. Bank receipts for 2019 totalled £125,873.95. Even on that generous basis, the company was entitled to £31,469 at most, an overclaim of £18,531. The loan was never repaid, the company entered liquidation in 2022 with no distribution, and the government met Barclays' guarantee claim.

The Secretary of State's case was that the defendant ought to have known that he had materially misstated turnover. No dishonesty was alleged. The judge found the conduct grossly negligent or incompetent to a very marked degree, and concluded that it amounted to misconduct justifying a finding of unfitness. She stressed the national emergency context and the declarations on the form warning of the importance of accuracy.

The summary of grounds in the Insolvency Service's affirmation referred only to misleading information, not gross negligence. The judge held that the finding was nonetheless open to her: the summary does not displace the affirmation, which is read as a whole, and a defendant need only know the substance of the case. She relied on Re Continental, Re Cubelock and Re Clean and Colour, and noted that Re ADS14 Ltd [2026] EWHC 1164 (Ch) (Stan) took a similar approach.

She declined, however, to follow Stan on two points. The first was its suggestion that an affidavit must state expressly that the alleged conduct is serious where a middle or top bracket period is sought. That requirement, she said, has no support in authority or in rule 3(3) of the 1987 Rules, and a defendant will in any event know the period proposed from the section 16 letter.

The second concerned sentencing. Stan had imposed four years on a director who fell into error, observing that misconduct short of knowing or reckless wrongdoing generally falls in the lower bracket or the bottom of the middle bracket. Judge Barber read that as a conclusion on the particular facts rather than a default position. Negligent or incompetent conduct can attract a middle bracket period, as Re Chapter 6 Ltd illustrates.

Aggravating features included the scheme's context, deterrence, the application for the maximum loan, prejudice to the taxpayer and the absence of mitigation or any explanation for the disparity in figures. Ten years, at the top of the middle bracket, was appropriate.

On compensation, the statutory threshold was met because the loan improperly obtained caused a direct loss to Barclays, with no intervening cause identified. The defendant's assertion of impecuniosity was unsupported by evidence and, the judge added, would not inevitably defeat a claim in any event. She fixed loss at the £18,531 overclaim rather than the whole loan, with interest at 2.5% from 8 July 2020, giving a total of £21,299.88. Costs of £5,573.01 were also ordered.

Thomas Cockburn, instructed by the Insolvency Service, appeared for the Secretary of State. The defendant was not represented.