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What Directors Need To Know About Bounce Back Loans

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Can I close my Business With a Bounce Back Loan?

There is nothing to stop you closing your business if it has an unpaid Bounce Back Loan.  To write off the debt then it should be liquidated using a creditors voluntary liquidation.  However, if there is a very small debt left, say £3000, then it may be possible to seek a dissolution.  The bank or lender may object to the striking off but at that level of debt it is probably not worth their while.  Remember thought if the company has other debts, then the correct process is a liquidation done by an insolvency practitioner as the company is insolvent. So how does a dissolution work? This process is also known as a voluntary dissolution. It is a provision in the Companies Act to allow the removal of the company from the Companies Register, typically when the company is dormant.If the company serves no useful purpose, its dissolution removes the need for the filing of annual returns and accounts. However, bear in mind that dissolving the company (removed from the Companies House Register) can only happen if the following conditions apply:The company has not traded for three months. The company has no assets, property or cash at the bank. The creditors are informed, requesting their permission for the company dissolution. Creditors are given three months to consider the request to dissolve the company and can reject such a request. The company has not changed its name in this period. The company has not disposed of any property or assets (this may include land and buildings, plant and equipment, debtors and other assets).As stated earlier if the Bounce Back Loan is more than say £3000 then the bank may well object and seek to wind up the company via compulsory liquidation.  You should then consider a creditors’ voluntary liquidation How to close the company with a bounce back loan using liquidation.Board Meeting: The directors convene a board meeting to assess the company's financial position and determine if it is insolvent. If they agree that CVL is the appropriate course of action, they will pass a resolution to initiate the process. Appointing an Insolvency Practitioner: The directors must appoint a licensed insolvency practitioner (IP) to act as the liquidator. The IP's primary responsibility is to oversee the liquidation, realize the company's assets, and distribute the proceeds to the creditors. Shareholders Meeting: Usually just before the creditors’ meeting where the shareholders agree to place the company into liquidation. Using the deemed consent process there is no need for an actual creditors meeting.  Notices go out about the proposed liquidators and if no objections are raised within 14 days, then the liquidation process starts.  This is more suitable for smaller uncontentious liquidations which is more likely in the case of companies with small bounce back loan and associated debts. Creditors' Meeting: The IP will convene a creditors' meeting, typically within 14 days of the board meeting, to inform the creditors about the company's financial position, the proposed CVL process, and to seek their approval. Liquidation Commences: If the creditors approve the CVL, the liquidator will commence the process of realizing the company's assets, settling any legal disputes, and distributing the proceeds to the creditors. Finalization: Once all assets have been realized and the proceeds distributed, the liquidator will prepare a final report and hold a final creditors' meeting. After this, the company will be dissolved, and its name removed from the register at Companies House.What happens to the Bounce Back Loan in liquidation? On entering liquidation, any bounce back loan becomes an unsecured debt i.e. the loan is not secured against any company assets. As per our flowchart on who gets paid first when a company goes into liquidation or administration, unsecured creditors are just before last out of the seven overall categories. So, what this means is that the insolvency practitioner, secured & preferential creditors and floating chargeholders must all be satisfied before the settling unsecured creditors and shareholders with their amounts. Now that HMRC are preferential and, in most cases, are a large creditor by value they will take a large chunk of any distributed money.  Consequently, unsecured debts are rarely paid in full in liquidation. For this reason, the bounce back loan is secured 100% by the government allowing the lender to go to the government to get repayment for the loan in full.  The British Business Bank, that has overseen these loans, has made it very clear that they expect the banks to pursue these debts in the normal way.  Only if the business becomes insolvent will the bank be be able to claim from the government. Can I Be Made Personally Liable for The Bounce Back Loan Initially, the answer is no. But, there are some caveats to this.If you use the BBL funds for anything not financially beneficial for the company then you may be held personally liable. So, the funds can be used to pay wages, by supplies, settle bills BUT if you, as the director, are found to take advantage and use the funds to pay personal loans off or invest in property etc, then personal liability is expected. When the company becomes insolvent the licensed insolvency practitioner has the role of investigating the directors’ actions – which includes seeing how the BBL was used.  If it is deemed that the money has been “stolen” from the company, then they will pursue the director for this.BBL funds can be used to refinance existing company debt, but you must use it wisely. If you choose to favour some creditors over others, then this brings risk of making preferential payments which can be reversed by a liquidator for up to 20 years after the payment was made.

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Can I close my Business With a Bounce Back Loan?

Directors are being investigated over Bounce Back Loans

New legislation has been enacted to make it easier to investigate and prosecute directors.The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act has just been passed into law which is principally designed to stop directors dissolving companies to avoid investigation into their conduct.There was a 205% increase in the number of directors being prosecuted for fraud as a result of investigations by the Insolvency Service in 2021. For the latest statistics for 2022/3 on this please see this report in Accounting WebThey are especially looking at companies that have taken out Bounce Back Loans (BBL) and Coronavirus Business Interruption Loans (CBILS)If you are struggling to pay the loans and the business isn’t viable then you must liquidate the company.   Click on this link to download our 2023 experts guide to liquidating a company.If you are dissolving your company, ensure there are minimal debts (ie less than £2000) and if you want all the templates and letters then you can get them from our site www.dissolvemycompany.co.ukDon't forget that if you write off debt using a Company Voluntary Arrangement rather than a liquidation then there is no investigation into the directors conduct.Don't get caught out and get someone to advise you. Call us on 0800 9700539 Now

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Directors are being investigated over Bounce Back Loans

What happens if the company defaults on its Bounce Back Loan?

During the pandemic, Bounce Back Loans (BBL) were introduced to help companies bounce back from the lockdowns imposed and the subsequent loss of trade.  However, with the pandemic lasting longer than expected this was often not enough to save them.  In many cases business has not recovered to the levels before the pandemic and this has resulted in companies defaulting on their loans.  In the event of a default the Government will compensate the lender but only after they have exhausted all means of trying to get their money back. If I default on a Bounce Back Loan, will the lender contact me? If you have defaulted on a Bounce Back Loan (BBL) repayment, you will hear from your lender within a few days.Different lenders will have their own processes for collecting debt and dealing with borrowers. In general, if you have fallen behind on a payment, your lender will contact you to discuss the situation.The sooner you pay off your loan after interest has been charged, the less likely you are to be pursued by your lender and the less it will cost you in total. What options are available if I default on the Bounce Back Loan In reality, if your company is unable to make the initial repayments, so default on the loan, it is likely that your company is insolvent. If it is you MUST seek professional insolvency advice as soon as possible as it is your duty as a director to do so.  However, there are options available.The Pay As You Grow (PAYG) scheme provides three main ways for a company that has taken out a Bounce Back Loan to reduce their monthly payments if they are struggling to find the money to repay what they owe. If you are unable to repay your Bounce Back Loan, the PAYG scheme may be able to assist you:The option of deferring payments for six months. This is in addition to the first-year payment holiday provided by the Bounce Back Loan. You do not need to have made any payments on your Bounce Back Loan to qualify. The term of the Bounce Back Loan can be extended from six to ten years. This allows you to cut your monthly payments in half, which can significantly improve your cash flow during this time. You have the option of making interest-only payments for the next six months. This will lower your monthly payment for these months while also preventing you from accruing any additional interest as you would if you took a payment holiday.What is the situation if I am a sole trader? There is no legal distinction between personal and business assets, which means you are personally liable for the amount owed.  However, the British Business Bank has said that recovery action cannot be taken on the sole traders main residence or vehicle.  However, they would still be liable for the debt and it is likely that it will be damaging to your personal credit rating. What action can the lender take? Because a BBL is similar to any other unsecured loan, the lender will attempt to recoup the funds through a variety of means. Banks have recovery teams in place that will contact you on a regular basis if you fail to make your repayments.Debt collectors may contact you, and you may be threatened with a County Court Judgement (CCJ), which can result in bailiffs seizing any business property as a form of debt repayment. Can I liquidate my company after failing to repay a Bounce Back Loan? As previously stated, if you are in default on your BBL repayments, your business is most likely insolvent. If this is the case, you should liquidate your business using a Creditors Voluntary Liquidation (CVL).Bear in mind that although you are not personally liable for the bounce back loan you could be at risk, financially, if you have not used the loan appropriately.  So, if you have taken dividends out using the BBL money and now you cannot pay the loan back then it is likely that you will have an overdrawn directors loan account.  This will need to be paid back in a liquidation.  The loan should have been used for paying staff, investment and suppliers to ensure that the business could "bounce back" . Shall I just let the Bank wind it up? As said before it is better to use a creditors voluntary liquidation than let the bank wind it up in the court (compulsory liquidation) Disadvantages of Compulsory LiquidationWaiting for creditors to wind up the company suggests that directors were unaware, or ignoring, their company’s financial state. If the Official Receiver finds this to be the case, the directors could be held personally liable for debts accrued since they knew the company was insolvent. The whole process takes a long time. Being wound up by the court will appear on Companies House records. Any relationship with the bank will be damaged more if they have to go to court.To learn more, read our guide to liquidating your business with a BBL.If you are concerned about falling behind on your BBL payments or anticipate having problems in the future, it is critical that you seek professional help as soon as possible.Contact us today to find out how we can assist you.

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What happens if the company defaults on its Bounce Back Loan?

Can I Liquidate My Company With A Bounce Back Loan?

If the company cannot repay the bounce back loan then it is in effect insolvent.  You can either start a creditors voluntary liquidation or wait for the bank to petition the court to wind up the company.  So, there is nothing stopping you putting your company into liquidation if it has a bounce back loan. What is a Bounce Back Loan (BBL)? The Bounce Back Loan was offered by the Government during the Coronavirus pandemic to help businesses get back on track, and gain access to emergency finance quickly. The loans were interest free for the first 12 months and are 100% Government backed for lenders.  In addition, you did not have to personally guarantee the loan.Remember, a bounce back loan is a LOAN. As with any debt you should know that ignoring it does not make it go away. It just makes the problem worse. So, try to not bury your head in the sand. So always follow the agreed terms. And if any doubts, talk to your provider.However, be aware that the consequences of defaulting on a BBL are less severe than if the loan was backed up with a personal guarantee. What Happens If You Can't Pay The BBL Back? Defaulting on your Bounce Back Loan is a clear warning sign of company insolvency. When this happens, creditors (anyone owed money) become a priority, and the directors have to act in their best interests. If you fail to make the loan repayments then expect action to be taken by the lender in order recover the debt. What happens to the BBL in liquidation? Liquidation is a quick way to close the company, it involves ceasing to trade and turning all assets into cash by ‘liquidating’ them. This money is then used to pay back creditors. There are two types of insolvent liquidation:Creditors voluntary Liquidation - which is started by the directors. Compulsory Liquidation - which is started by creditors via a court procedure and overseen by the official receiver.On entering liquidation, any bounce back loan becomes an unsecured debt i.e. the loan is not secured against any company assets. Unsecured creditors normally receive nothing in liquidation.  So for this reason the Bounce Back Loan is guaranteed 100% by the government. The British Business Bank, that has overseen these loans, has made it very clear that they expect the banks to pursue these debts in the normal way.  Only if the business becomes insolvent will the bank be be able to claim from the government. Can I Be Made Personally Liable For The Company Debts? Initially, the answer is no. But, there are some caveats to this.If you use the BBL funds for anything not financially beneficial for the company then you may be held personally liable. So, the funds can be used to pay wages, by supplies, settle bills BUT if you, as the director, are found to take advantage and use the funds to pay personal loans off or invest in property etc, then you may be liable. When the company becomes insolvent the licensed insolvency practitioner has the role of investigating the directors’ actions – which includes seeing how the BBL was used.  If it is deemed that the money has been “stolen” from the company then they will pursue the director for this.BBL funds can be used to refinance existing company debt, but you must use it wisely. If you choose to favour some creditors over others then this brings risk of making preferential payments which can be reversed by a liquidator for upto 20 years after the payment was made.So, you can liquidate your company with a bounce back loan.However, if you have a Bounce Back Loan do not try and dissolve the company! All the banks receive a notice from Companies House if you try and they will object. So, you either have to liquidate the company voluntarily or wait for the bank to apply through the court (risky, stressful and will take a long time)If you would like to liquidate your company, call us on 0800 9700539 or you can fill out a form on our www.liquidatemycompany.com website and get a quote in minutes. We can talk you through the process, organise the legal paperwork and begin proceedings.

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Can I Liquidate My Company With A Bounce Back Loan?
worried businessman

What Directors of Companies with Debts Need to Know in 2023

Here is what we, in the insolvency world, know now after the last 12 months of dealing with thousands of distressed directors.Business growth is impacting working capital. Do you need to sort out cashflow problems? Will the business need new funding soon? Has your bank said no? If so contact us on 0800 9700539 Staff shortages due to a very tight labour market. This harms productivity. What is your plan to cope? Inflation and rising taxes are likely to dampen consumer confidence on some kinds of spending.  How do you plan for these changes?Annual accounts, corporation tax returns, confirmation statements must be filed even if your company was seriously impacted by Covid. These take time and cost money with accountants. Failure to file can lead to fines.Many directors are considering voluntary dissolution for their companies or clients companies if they have unmanageable debts. This is a waste of time and possibly advisory fees.If your company has a bounce back loan, the lender will REJECT the strike off and will actively tell Companies House it rejects the dissolution. Otherwise the BBLs cannot be refunded, (by the British Business Bank) to the lender.If the company owes any tax such as VAT, PAYE, NIC or corporation tax, then HMRC will REJECT any strike off and actively tell Companies House it rejects the dissolution.HMRC is a secondary preferential creditor for VAT, PAYE, NIC, and it will require voluntary liquidation or may even begin to issue winding up petitions to seek any recovery through compulsory liquidation. Any taxes owed, by the company, may be lost if the company is dissolved.We are also seeing many enquiries and clients receive letters from private debt collectors, who're acting on HMRC's behalf. These are usually for under £10,000 of tax owed. Has HMRC outsourced the small stuff, to focus on larger debtors?The message is loud and clear - do not waste time, or incur advisory fees, by trying to avoid insolvent liquidation, get advice quickly and ACT quickly. The correct solution is creditors voluntary liquidation. If the company is viable, then consider the rescue options too.If you are a company director or advisor, please read our experts guide to help learn more about this process. It is FREE and anonymous to download.If you want another and compelling reason to avoid proposing voluntary dissolution....when the company has creditors and BBLs The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act has may be used to pursue existing and former directors for debts, with the possibility of prosecution.The Act is designed to prevent:False dissolution of companies to avoid investigation into the directors Using the dissolution of companies to shed liabilities and transfer assets to a new company. The use of the company dissolution process as an alternative to formal insolvency proceedings, such as voluntary liquidation2022 saw a sharp increase in the number of directors being prosecuted for fraud, showing that the Insolvency Service is serious about cracking down on directors, especially in relation to the CBIL and BBL schemes.These new pieces of legislation mean that it is much easier to investigate dissolutions and will open up company directors to a much higher level of scrutiny.So the message is this: do not try to dissolve an insolvent company that has BBLs debts, HMRC and or other creditors.

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What Directors of Companies with Debts Need to Know in 2023

What are the consequences of defaulting on a Bounce Back Loan?

What is a Bounce Back Loan? This is a government-backed loan for small businesses, introduced during the difficult trading times through COVID-19 and the numerous related lockdowns. Loans could be 25% of your turnover with the maximum loan being £50k.  The loans also and had low-interest rates. The availability to apply for this loan stopped on 31 March 2021. What is a default? Defaulting on a loan means missing a scheduled repayment. Your account will therefore fall into arrears. When this occurs, your lender will have a number of options, as outlined in the agreement you signed when taking on the loan.When companies took out the Bounce Back Loans the total length of the pandemic was underestimated. So, some businesses have struggled for longer than anticipated.  In response the terms of repaying the loan were extended to up to 10 years.  Remember, the loan may have been Government secured, BUT the responsibility for repayments lies with the company (you will not be personally liable as a director, but your company is as it is own legal entity).If you think you may default on the loan then the most important thing to do is to communicate with your lender. Inform them about any difficulties you are facing in meeting the payments (before they contact you!). This way, they are aware and may be able to help. If they cannot help then you know you must seek alternate options. However, more often than not, lenders will be fair and considerate if you communicate.The Office of Budget Responsibility’s Fiscal Sustainability Report 2020 predicted that the number of businesses with Bounce Back Loan defaults could be around 40% - we are unsure how this will play out,  but all in all you are not alone! What options can my lender suggest to help? Once you have got in touch with your lender – as suggested the first step to take, there are some options that can be explored together.Renegotiating the payment plan to help you maintain your account going forward. Pay as You Grow Scheme; taking a short payment holiday from the Bounce Back Loan. Extending the loan length from the standard 6 years, to 10. Switching the loan to an interest-only basis for a short duration.These options can give breathing space for your business’s trade and cash flow to improve. What if you are still struggling to pay? Get in touch with a licensed insolvency practitioner like us at Company Rescue. There may be deeper issues noticed or at least worth reviewing. A default may mean more serious financial problems – even the brink of insolvency!Speaking with someone experienced in helping others with similar situations can guide you through. Can I restructure my company with a Bounce Back Loan default? Of course! A Bounce Back Loan default does not mean that is the end for the company. There are various business help solutions to rescue the company and steer it through financial and operational struggles. This is why speaking to a licensed insolvency practitioner would be of use – they can go through this with you and explore your options and viability.Place the company into administration. This will allow you breathing space since a moratorium is put around the company stopping any legal action, whilst you focus on restructuring the company’s finances and operations, to rescue its viable aspects. Enter a Company Voluntary Arrangement / CVA. This involves a formal payment plan being agreed upon by the creditors and the company directors. It often lasts for 3-5 years, reducing the payments per month so the company can trade in the meantime, thus being able to have the funds to pay back.If your company cannot be rescued and has no chance of being able to pay back any of the debt then, winding up the business may be the most suitable option. If you want this process to happen quickly so you can get on with your life then the best option is a Creditors’ Voluntary Liquidation and you will need to appoint a licensed insolvency practitioner to start the process.Alternatively, you could wait for a creditor to wind up the company by going to court but this type of liquidation known as compulsory liquidation carries more risk, can be more stressful and can take at least a year. In both cases the insolvency practitioner will need to investigate the conduct of the directors and establish if the bounce back loan was used appropriately. Ultimately, in this case, the Bounce Back Loan and any penalties or fees associated, will be written off, as with any other unpayable debts for creditors.If you would like further information or some expert advice, get in touch with us today. Just remember all we have said in this guide and keep in mind the top tip - do not ignore defaults as this will just worsen the situation!

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What are the consequences of defaulting on a Bounce Back Loan?

What if I Can’t Pay Back My CBILS Loan?

Directors may worry that they may not be able to pay back CBILS loans that have been granted to their companies during the pandemic. We discuss that here. But, first of all it is important to know what the loan was intended for and the conditions attached, so we begin with a loan overview. Coronavirus Business Interruption Loan Scheme (CBILS): This scheme provided facilities of up to £5m for small to medium enterprises who experienced cashflow issues as a result of the pandemic. Through the Coronavirus Large Business Interruption Loan Scheme which followed the initial CBILS, up to £50m is offered (£200m as of 26 May) for firms with revenues between £45m and £500m.CBILS were available for most business finance products such as;term loans, overdrafts, invoice finance asset finance.The scheme provided the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. CBILS: Key FeaturesUp to £5m facility repayable over a period of up to 6 years (SMES) or £50m (£200m as of 26 May) for larger businesses 80% guarantee to the Lender Interest and fees paid by Government for 12 months Overdrafts and Invoice Finance for 3 years Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. When borrowing up to £250,000, a personal guarantee is not required Companies taking out these loans are 100% liable for the debt and there are no restrictions on the interest rates banks charge A term extension beyond 6 years, up to a maximum of 10 years for existing CBILS facilities can be made in connection with the provision of forbearance relating to the facility, at the discretion of the lender if within its usual forbearance policies.Who was eligible for this loan? Smaller businesses from all sectors could apply for the full amount of the facility. To be eligible for a facility under CBILS, the SME must:Be UK-based in its business activity, with annual turnover of up to £45m (or up to £500m to be eligible for the Coronavirus Larger Business Interruption Loan Scheme) Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty. Previously businesses which were classed as ‘undertakings in difficulty’ were unable to access CBILS because of EU rules. Now businesses in this category and which have fewer than 50 employees and a turnover of less than £9 million can apply to CBILS.Applications for CBILS loans closed on the 31st March 2021.  They have been superseded by the Recovery Loan Scheme What could the company use the CBILS loans for? You could use the loans to pay staff wages (directors included). It could also be used to help with rents and business rates, any monthly business costs or overheads such as phone and electricity bills. Finally, directors may have wished to use it to refinance other business debts to lower the interest costs related.CBILS loans could not be used to pay dividends or to pay into a personal savings account to accrue interest. It could not be used for any purposes other than those business related. To do so would not be “acting reasonably and responsibly” and you could be made personally liable if the company enters into voluntary or compulsory liquidation. What if we KNOW we can’t pay back CBILS loans? It has been reported that almost half of the emergency loans which the Government has provided during this pandemic, may never be repaid, which would cause a £26bn bill to the UK Treasury.Advice from us, as a company rescue firm, is this: DO NOT run down the CBILS cash until there is nothing left to pay creditors, wages or to cover the cost of a liquidation.  Same applies for Bounce Back Loans as well.We are aware that may non-viable companies have taken out these loans. In fact, the government loosened the criteria for these loans so that companies marked by lenders as "undertakings in difficulty" could apply for these loans. So ultimately, if your company is unable to pay back this emergency loan, it is not too much of a problem, if you have acted “reasonably and responsibly as a company director”. The government are aware and this was expected. But perhaps one thing that was not expected was how long the period of the COVID crisis would be!Companies that took out this loan and thought that after a few months of severe effects of the pandemic, it would be possible to start repaying the amount are now stuck. The issue of being unable to repay the loan is building up.Remember that if you are unable to pay back this emergency loan, then you risk your credit rating being affected at the bank which can limit your attractiveness to future lenders.CBILS loans in excess of £250,000 are often backed up by directors’ personal guarantees so unfortunately there will not be a way out of that. On the other hand, for loans below the value of £250,000 you may be held personally liable and the ‘’veil of incorporation’’ may be lifted on the limited company if you have acted unreasonably.If you are in a hole then the usual advice is to stop digging! Do not run away from the issue nor make it worse. Face reality and assess the likelihood…your business may well be insolvent. Check out our pages, complete the insolvency tests and read our warning signs – do these apply or sound familiar? The most important thing if you find yourself in this situation is to ACT. Especially given that the factors involved here, personal guarantees, insolvency, liabilities. So, reach out and get professional assistance today! Can I Just Dissolve The Company? No you cannot!  The Insolvency Service is to be given powers to investigate directors of companies that have been dissolved as set out in the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill. This will close a legal loophole and act as a strong deterrent against the misuse of the dissolution process.Extension of the power to investigate also includes the relevant sanctions such as disqualification from acting as a company director for up to 15 years. These powers will be exercised by the Insolvency Service on behalf of the Business Secretary.The measures included in the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill are retrospective and will enable the Insolvency Service to also tackle Directors who have inappropriately wound-up companies that have benefited from Bounce Back Loans.

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What if I Can’t Pay Back My CBILS Loan?

Lloyds Banking Group Closing Companies’ Bank Accounts For Failing To Pay BBLs

In quite an extraordinary development, companies are now receiving letters from their banks demanding payment of the Bounce Back Loan within 14 days.  Click on the image to show the letter.In this letter they claim that directors breached the terms of the BBL loans application by making misrepresentations. This, Lloyds and Bank of Scotland claim is grounds to issue a full repayment demand as attached. What will you do if your bank sends this letter to your company? If you cannot repay it the bank may have to issue a winding up petition after giving you 21 days notice.  We do not know the specific mis representations that were made but we are talking to people that made some pretty over optimistic projections, so that might be reason.  Especially given that the bank has time to see the current and past turnover now.More importantly within 14 days the banks have said they can simply close your company or business bank account!!So, if you KNOW that you cannot service the bounce back loan(or CBILS) you should take professional advice today from experts like us. We’ve been helping companies online for twenty years. We are company debt counsellors, turnaround experts and insolvency practitioners.

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Lloyds Banking Group Closing Companies’ Bank Accounts For Failing To Pay BBLs

Can I Strike Off A Company With A Bounce Back Loan

If you have a bounce back loan which you cannot pay back, you may to tempted to strike your company off the register at Companies House, hoping that this will kill off the liability. However, the bank or provider who provided the loan will be informed. The banks search the applications to check on any liabilities.  If they see a company that they have lent money to, they will then object to the striking off. Despite the Government guaranteeing the loan – the bank/providers are responsible for collecting in the loans and they will only be able to claim compensation from the government if the company goes through an insolvency process.The purpose of striking off (applying to Companies House to be removed from the Companies House Register) is to bring the company to an end if it has no further purpose.  The company should not be trading for 3 months or more and have no or insignificant debts.Even If your company happens to get struck off with a BBL then it is likely that the company will be reinstated (at any point going forward).In the Companies Act 2006 section 1003 Paragraph 6(a)the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and(b)nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.which refers to the fact that even if a company is struck off, if there are any liabilities, they continue with the director or managing officer and so these liabilities will be enforced upon if not settled.So, in response to the question…No. you cannot strike your company off if you have not paid back your bounce back loan.The best option if faced with this situation is for you to liquidate your company. See more here. In a nutshell, when entering liquidation, the BBL becomes an unsecured debt. Depending on how much capital is realised from the company's assets, the BBL can then be covered and paid. But in liquidation, unsecured debts are rarely paid in full.Due to the pandemic the government has 100% guaranteed the loans in the event of insolvency which encouraged lending in the first place. However, the banks are expected to chase the debts in the normal way first (bailiffs, phone calls, letters) and only claiming from the Government if the business becomes Insolvent.

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Can I Strike Off A Company With A Bounce Back Loan