Can I Liquidate My Company With A Bounce Back Loan?
Yes, but you have to be careful ....
Posted by Roger Eddowes on 17/08/2023 @ 8:00AM
Many small businesses signed up for a Bounce Back Loan (BBL) during the pandemic as it was an essential lifeline. Many have been repaying, but others have been putting it off as long as they can. What if you now want to liquidate your business?
If misused, a director can be personally liable for Bounce Back Loan money!
One option for insolvency is called a Creditor's Voluntary Liquidation (CVL). This would see your company liquidated and the unpaid Bounce Back Loan would become an unsecured debt. The unpaid debt would be included in the insolvency process, however, any outstanding debt after the insolvency procedure is completed would be written off.
"But what about the directors?"
As the loans are 100% backed by the Government, and no personal guarantees needed to be signed, the directors can be relieved to know they are not personally liable for repaying the loan. Directors are protected with limited liability, meaning their own finances are separate from that of the limited company.
However, if misused, a director can be personally liable for the borrowed money. Misuse of a Bounce Back Loan could potentially include the use of the loan money for tax avoidance, gambling or holiday purposes, use of loan money for personal asset purchases, or loan money being used to pay another loan which has already gone into default.
If you're concerned your company may be in financial difficulty and you're considering a liquidation, the team at Essendon Accounts & Tax are here to give you free, confidential advice. We can recommend an experienced insolvency practitioner.
"They'll be able to advise you of the steps to place the company into liquidation!"
At the end of the insolvency arrangement, any unsecured debts would be written off. Placing the company into liquidation will result in the formal closure of your company and can offer you a fresh start, free from worrying about the BBLS loan.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about liquidating your company with a Bounce Back Loan, it may be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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