Covid- 19 has impacted people and businesses all over the world! The Bounce Back Loan Scheme (BBLS) has provided support to so many businesses who have been struggling since March 2020. The scheme allows eligible businesses to borrow between £2,000 and £50,000 to cover additional costs to recover from coronavirus-related hardships.
Can I liquidate my company if I have a Bounce Back Loan?
Despite the monies from BBLS, businesses may find continuing to trade a struggle and unfeasible in the current climate. If your company has become insolvent, recovery may not be an option given the current circumstances. You can place the Company into Creditors Voluntary liquidation if you have taken out a loan.
BBLS in a liquidation?
Banks are often a secured creditor (security over company assets) in a liquidation BUT not with BBLS. The loan is an unsecured creditor, and these debts are different from secured creditors as they don’t have security over the company’s assets.
Personal liability
Any personal guarantees signed will crystalise after the liquidation and the Director becomes personally liable. The BBLS are 100% guaranteed by the Government, and so free of personal guarantees. As soon as the debt crystallises, the bank which provided the BBLS will demand repayment from the Government. Not the company’s director.
This, and the temporary relaxation of wrongful trading laws, doesn’t mean that directors are free from any action which may be commenced against them for fraudulent trading or from abuse of the process.
In a nutshell
If your Company is struggling from coronavirus-related debt whether you have manged to obtain a loan or not, you must take advice as soon a s possible.
Next Step
If you want to find out anything further about this topic then please feel free to call on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
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