Bounce Back Loan Company Liquidation
Did you take out a Bounce Back Loan and can no longer afford to repay it?
Many businesses have found it hard to recover after COVID-19, and the pressure of repaying these loans hasn’t made it any easier. If things have reached a point where the company can’t continue, liquidation could help you resolve the debt and take away the stress of meeting monthly repayments.
What Happens if You Can’t
Pay Back a Bounce Back Loan?
Bounce Back Loans were government-backed, but directors are still responsible for acting appropriately if the business can’t repay what it owes. If your company is insolvent, you have a legal duty to act quickly, usually by starting liquidation to avoid wrongful trading. In most cases, a Creditors’ Voluntary Liquidation (CVL) is the best route.
- Start with a free, confidential call about your worries.
- We contact your lender about the Bounce Back Loan.
- We’ll help get your company into liquidation and communicate with other creditors and HMRC.
We can help by discussing your situation and available options. Contact our expert liquidation team for a no-obligation chat.
How Does Bounce Back Loan Company Liquidation Work?
Stop Trading – Before the company can be closed down, it should usually stop all trading straight away to avoid worsening the amount of debt owed to creditors.
Appoint a Licensed Insolvency Practitioner – They’ll take control of the process and manage communication with lenders and creditors.
Selling assets and paying debts – Any assets will be sold and the proceeds used as far as possible to repay creditors in the correct order.
Writing off the Bounce Back Loan – If there’s nothing left to repay the loan, it is then written off. Directors won’t be required to pay it personally unless there’s been fraud or misuse.
Closing the company – Once everything’s dealt with, the company is removed from the Companies House register.
Are Directors Personally Liable for the Loan?
As Bounce Back Loans were issued without personal guarantees, the debt stays with the company, but there are exceptions. If a director has misused the loan by using the money for personal expenses, or continued trading when the company was insolvent, they could become personally liable for the debt or even disqualified.
If you’re unsure, it’s worth getting advice to make sure you’ve met your responsibilities as a Director. Our team is available to discuss your company’s situation, offering a free, no obligation financial health check.
Can I close my company if it still owes the Bounce Back Loan?
Yes, but it needs to be done the right way. Some directors may try to dissolve a company with unpaid debts but this can backfire, as creditors (including your bank) can object. This can end up getting you nowhere. Even if you do manage to get the company dissolved without paying off all debts, it could lead to an investigation or your company being restored and wound up through the courts.
A CVL is usually the best option if the company can’t afford to repay the loan. The appointed insolvency practitioner takes over the communication with the loan lender as part of the process of closing down the company.
What Happens After Bounce Bank Loan Liquidation?
Once the company’s liquidation has ended:
- The remaining Bounce Back Loan debt is written off as long as there is no misconduct.
- The company is removed from the Companies House register, and creditors can no longer chase repayment.
- Directors can start a new business, though restrictions apply if they want to use a similar company name.
When you’re dealing with debts, especially when a Bounce Back Loan is involved, it can be really stressful. But you don’t have to figure it all out alone.
Speak to one of our insolvency experts today for confidential advice.
