Liquidation and Bounce Back Loans?
Can I liquidate my business if it has a Bounce Back Loan?
If your company though remains solvent and you wish to liquidate your company using a Members Voluntary Liquidation. Then you will be required to repay the loan in full.
However, closing the company using a Creditors Voluntary Liquidation requires your company to be insolvent. Therefore the company has no ability to either pay its debt as and when due or liabilities greater than it’s assets.
Bounce Back Loans and Insolvency
Bounce Back Loan Scheme (BBLS) has assisted many UK companies to remain afloat. The idea is that it would allow those companies eligible and solvent to borrow up to £50,000 to cover costs and ensure continuity of employment and assist the UK supply chain. However, the Coronavirus COVID-19 has entered a second stage. The statement by the Prime Minister on Tuesday, September 22nd means companies will endure further financial hardship not originally covered in the bounce back loan.
This will lead to companies considered solvent now facing insolvency.
It is important directors consider all option moving forward and discuss cashflow with a Licensed Insolvency Practitioner.
CBILS (Bounce Back) Loan should not deter you from liquidating. Liquidation means an end to all debt of your company. The obligation for the Bounce Back Loan disappears once the liquidation process complete.
Liquidation and Bounce Back Loans? – Directors duties
If you find that having taken a bounce back loan that your company now experiences financial difficulties due to the prolonged period of the Coronavirus COVID 19 virus. Then as a responsible director, you should contact a licensed Insolvency Practitioner for advice.
Trading while insolvent can open you up to personal liability. So, important to take advice.
What happens to the loan in liquidation?
If you decide to Liquidate your company then the loan is treated as an “Unsecured Creditor”.
Directors of a limited remain protected as long as they have acted responsibly. A limited Company offers limited liability
Am I liable for the bounce back loan in any way?
As you have signed no personal guarantee, then you remain not liable as the government guaranteed the loan.
Closing down a Limited Company.
To close an insolvent limited company requires a licensed Insolvency Practitioner to be appointed as Liquidator.
For further help, please contact Jeff Jones on 0800 612 5448.
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