55% are arrested for covid abuse

More than half of the 3,280 company directors banned in Great Britain from 2023 were caught abusing Covid-19 financial support, new figures reveal, proof that the pandemic’s emergency lending programs are still looking for victims five years on.

Figures released by the Insolvency Service, obtained through Freedom of Information requests by law firm Weightmans, show that 1,683 people, 55 per cent of the total, are linked to the misuse of state-backed financial aid during the crisis.

Denials peaked at 1,222 in 2023/24 and have fallen since then, with 1,021 recorded so far in 2025/26. The vast majority, 3,054, were issued under Section 6 of the Company Directors Disqualification Act, which covers misconduct by directors of insolvent or dissolved companies. Another 344 cases of bankruptcy and debt reduction were recorded during the same period.

These findings are in line with previous official figures showing that more than half of directors from 15 months to mid-2023 have been linked to allegations of fraud or abuse of the Covid loan schemes.

While the number of withdrawals is going down, the money that is being struck is going in the opposite direction. Over the past three years the Credit Union has recovered more than £1.8 million in compensation from disqualified directors. More than half of that figure (52 per cent) came last year alone, when 123 people were ordered to pay back almost £974,000.

The number of compensation orders and actions issued increased by 32 percent last year. Under Section 15A of the CDDA, the court can require a non-executive director to compensate creditors of an insolvent company for losses caused by the director’s misconduct.

Compulsion is unlikely to soften. The Insolvency Service has recently launched an AI-powered team to pursue rogue directors behind an estimated £800 million “phoenixism” crisis.

Construction has seen more directors banned than any other sector, with 536 dismissals over three years. That will surprise few. The industry is also set to record more corporate failures than any other sector by 2025, as material costs rise, supply disruptions and cash flow pressures intensify.

Lodging and catering jobs followed with 487 layoffs, third out of 464 wholesalers and retailers. Administrative and support services and professional, scientific and technical occupations rounded out the top five categories, and were the only two categories to increase year-over-year, each up 23 percent.

London recorded the highest regional figure at 820, almost double the North West’s 440. Wales had fewer bans at just 48, but the sharpest rise, up 175 per cent in 12 months. Eight of the 11 states and nations saw an increase in ineligibility last year.

A revocation order prevents an individual, including directors, shadows and non-executives, from acting as a director or taking part in forming, marketing or managing a UK company for up to 15 years. It may also prevent them from running charities and other school management roles. A disqualified person can still trade as a sole trader, be a company secretary or hold shares, as long as he does not participate in the management of the company.

Shevy Narendra of Weightmans said: “The findings show an increasing amount of compensation when it comes to dismissal of directors, with more than £1.8 million recovered, even with a decrease in the number of cases, according to the Insolvency Service.”

Directors can apply to the court for permission to remain involved in the management of a particular company, but Narendra cautioned: “Time is of the essence when considering a voluntary winding-up or Chapter 17 application, and professional legal advice is recommended to ensure the best outcome and least disruption to current management.”

For owners of struggling firms, the message is meaningless. The pandemic support letter has not yet been closed, and the Insolvency Service is still working on it.