The owner of a defunct training provider at the centre of an apprenticeship scandal has been slapped with a six-year director’s ban by the government’s Insolvency Service.
Andrew Merritt is now barred from running a company until August 15, 2029, following a three-year investigation into his conduct at SCL Security Ltd.
His wife, Kym Rowe, was also a director of the firm and has herself been handed a four-year disqualification.
SCL Security Ltd was a training provider that subcontracted from various colleges to deliver apprenticeship training. The company went insolvent in October 2020 after an Education and Skills Funding Agency audit – prompted by several FE Week investigations – found illegal claims for public funding.
The agency found, for example, that apprenticeship money was being used to pay the wages for 16-to-18-year-olds, which is strictly against funding rules.
Multiple colleges, namely Brooklands College which was left on the brink of collapse owing to the scandal, are attempting to reclaim over £20 million of funding from the insolvent business to repay the government otherwise face having to fork out the costs themselves.
Merritt declared bankruptcy in 2021. Liquidators have been working on ways to repay creditors, including by selling his assets such as his £2.2 million matrimonial property, according to a recently published statement of affairs.
Merritt had taken out an £8 million directors’ loan when the business closed, and still owes £6.5 million of the loan.
Insolvency Service documents about Merritt’s ban, seen by FE Week, states that SCL Security submitted inaccurate corporation tax returns from 2010 to 2018 and still owes around £2 million to HMRC.
The documents added that Merritt failed to properly account for his outstanding director’s loan, which has resulted in a charge of over £1 million on top of the loan itself.
The joint liquidators, Phil Deyes and Anthony Milnes from Leonard Curtis Business Rescue and Recovery, said in their report that claims to SCL Security during the liquidation to date total £2.5 million from HMRC, £25.6 million from colleges and the ESFA, £77,000 from trade creditors, and £4,500 from an employee.
The liquidators’ latest statement of affairs explained that following receipt of the funds from the bankruptcy estate of Merritt, they intend to “make a distribution to unsecured creditors”.
“The quantum and timing of the dividend is dependent on further realisations from the bankruptcy estate and the costs of the liquidation being agreed,” the report added.
And while the claims received from ESFA and the colleges have been reviewed they have “not been formally agreed at this stage”.
Due to their “complex nature” the joint liquidators will refer to the work carried out by Andrew Jackson solicitors, and “may well seek further guidance on the claims”.
Merritt and Rowe were approached for comment.