Directors of Hampshire firms struggling to repay COVID loans could face disqualification if they don’t seek timely advice.

The warning, issued by Mike Pavitt, council member for the Southern and Thames Valley region of R3, the UK’s insolvency and restructuring trade body, may come as a shock to many.

In 2023/24, 68 per cent of director disqualifications were linked to COVID loans, and this figure has risen to 76.5 per cent so far for 2024/25, with an anticipated total of 1,200 disqualifications this year, according to the Insolvency Service (IS).

Mr Pavitt pointed that many COVID-related loans were taken with a self-certified application during a time of confusing guidance.

Despite this, even a basic eligibility check by lenders would have revealed if an established company was ineligible.

Mr Pavitt said: "COVID-related loan repayment difficulties have not gone away, especially with new tax burdens anticipated in the Spring, and nor, it seems, has the Insolvency Service’s appetite for pursuing director disqualifications linked to them.

"My main fear for directors who have just been doing their best to service legacy COVID-related debts in difficult circumstances is that they fail to seek the right advice early enough and sleepwalk into a disqualification.

"Our analysis of the figures shows that the rate of disqualifications related to COVID loan abuse is higher than ever. Also, the average length of director disqualifications is going up significantly and is now 9.3 years, compared to 7.4 years only two years ago, an increase of 25.7 per cent.

"These statistics support some of our members’ observations on the ground that the Insolvency Service has this year recommended a higher proportion of cases for disqualification action, notwithstanding that the directors involved may already have settled (without admission) any potential claims advanced against them in the name of the company or its liquidators."

Mr Pavitt also suggested that the government is unlikely to offer loans of the scale and type seen during the COVID pandemic in the future without more stringent checks.

R3’s Southern and Thames Valley region includes Kent, Surrey, Sussex, Buckinghamshire, Oxfordshire, Hampshire, the Isle of Wight, Dorset, Wiltshire, and Berkshire.