Barclays has teamed up with a specialist insolvency practitioner to recover money loaned to small businesses through the UK’s Covid support schemes.
The British bank has joined forces with insolvency firm Manolete Partners to recover emergency loans paid through the UK government backed Bounce Back Loan Scheme (BBLS), the Financial Times first reported.
The UK’s BBLS initiative saw top banks pay out zero interest loans of up to £50,000 to small and medium enterprises (SMEs) on a six-year basis. The British Business Bank’s (BBB’s) scheme saw around £46bn worth of 100 per cent paid out to UK SMEs.
Barclays, the largest lender in the BBB backed scheme, loaned £10.8bn to SMEs. The bank has now partnered with Manolete to collect money from more than 100 companies that have defaulted on the bounce back loans.
A Barclays spokesperson said that although the bank “looks to support customers who are facing financial difficulties, including those who borrowed under the government schemes… in certain circumstances, including where there appears to be misuse of funds, formal recovery action must be taken to recover taxpayers’ money.”
AIM-listed Manolete Partners is a specialist litigation financing company that funds and buys insolvency claims. The litigation funder works with lawyers to maximise recovery of creditors’ funds.
Manolete chief executive Steven Cooklin told City A.M. that outside of the Barclays project, the insolvency practitioner has worked on a series of projects to recover “misappropriated Bounce Back monies” over the last 18 months.
“Recovery rates have generally been very high and cases completed within an average of just 5 months and at minimal cost,” Cooklin said, as he suggested Manolete’s “track record in this area” puts it in a strong position to complete the Barclays project.
The recovery scheme follows the UK government’s decision to write off recovering £4.3bn of £5.8bn worth of money defrauded through the country’s Covid-19 support schemes.
Earlier this month, a UK tribunal ruled information on thousands of small businesses that received money through the BBLS will remain a secret, after it blocked a campaign group’s Freedom of Information (FoI) request.