What’s happening now and how companies with outstanding arrears can actually close down
If I had a pound for every limited company that owes money on their Bounceback loan and has unsuccessfully tried to strike their company off the register at Companies House using a DS01 form Voluntary Strike off, hoping that this will kill off the liability, I’d currently be sitting on at least £51,000 – more than a maximum Bounce back loan with a chunk of change.
“But my mate has got rid of it.” They haven’t.
“The bank said it was OK.” Nope.
“My accountant is taking care of it for me.” Really? It is their ethical duty to refuse to help.
How am I so sure?
Businesses with significant debts ARE struck off from Companies House every day – IF their creditors don’t object.
BUT with Bounce Back Loans your creditor IS objecting and any strike off will be suspended.
This was recently confirmed on Tuesday 19th October 2021 in the House of Lords during a Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill debate and which received Royal asset and passed into law on 17 December 2021
“In March 2021, the department entered a blanket objection to any company with an unpaid bounce-back loan being struck off the register. This has prevented almost 51,000 companies, with total unpaid loans of over £1.7 billion, being dissolved. This action has ensured that lenders can continue to make recoveries on loans due to be repaid and will ensure that the public purse is protected.“
Lord Callanan – Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)
Hansard | Volume 815: debated on Tuesday 19 October 2021
So if you have a bounce back loan which you cannot pay back, your lender is expected to chase the debts – letters, phone calls, solicitors, court action, bailiffs etc.
And The Government will object to your attempts to circumvent the process.
So whether you call it striking off, poor man’s liquidation or The Spongebob Plan – there are NO shortcuts this time and you’re wasting a least a tenner.
Currently you only have 2 options to immediately close your limited company
Repay its Debt in full and strike off or Liquidate the company using a Licensed Insolvency Practitioner which will clear any unsecured debts – like the bounceback loan – as long as you used the loan to the economic benefit of the business.
A chat with any Licensed Insolvency Practitioner to establish your position and possible personal liability is almost always free in the first instance.
Typically a Licensed Insolvency Practitioner will charge around £5000+vat to close the business with a liquidation.
But you can use the sale of business assets, outstanding invoices, any remaining bank balance or if you have been trading for 2 years, apply for director’s redundancy payments to help pay this fee, if you were on PAYE and you apply within 6 months of closing the business.
If you can’t do either of these currently, then speak with your lender and remember that your Bounceback loan currently offers PAY AS YOU GROW options – repayment holiday, term change and interest only payments.
If you want some further guidance or just an informal chat please get in touch