Bounce Back Loans – Just keep on bouncing!
As it is now over 12 months that some companies took out a Bounce Back loan, they are starting to have to pay them back. Some businesses are not going to be able to recover and will not be able to open again due to problems with covid.
Some of these companies are trying to dissolve their companies via the dissolution route (DS01) at Companies House, which is commonly referred to the £10 route. We are seeing an increasing number of objections being received by these companies and therefore the company cannot go down this route. The directors can apply to Companies House for the identity of the person who has objected, although the objector can remain anonymous if they request for their identity not to be revealed to the directors. The objector will have to provide proof that they are a creditor of the company.
Some of the directors have been advised that as the company took a bounce back loan, then the banks have objected as monies are still due. The directors can make another application to dissolve the company via the DS01 route and will have to pay another £10 for each fresh application and this payment cannot be made from the company. We have found that the objections are still being made and therefore the company cannot be closed down by this procedure.
If the company is insolvent, the directors can decide to close down the company via liquidation, as the directors have a duty to act in the best interests of the company under the Companies Act. We offer a reduced price on this service as the company has tried to dissolve the company and this method has been objected to. The procedure for liquidation is the same and we have to give notice to every creditor of the company, but we hold the creditors meeting via a conference call, as there is no need to hold a physical meeting of the creditors unless the 10% rule is achieved (10 creditors, 10% in value of creditors, or 10% in number of creditors). The directors still have to hold a meeting of the directors and shareholders, but we provide all of the paperwork needed for all meetings.
We assist the directors in winding up the company in an orderly and legal manner and deal with creditors, staff, HMRC, landlords, suppliers, retention of title issues, the bank and any other problems that the directors, or company faces.
We will also give advice to the directors on any personal guarantees that they may have given on behalf of the company and we will hold their hand and give support and guidance on all aspects of the procedure, as we know that it is a strange and unknown situation for the directors to be facing.
With regards to the bounce back loans, we will ask how the monies were spent by the company, as this forms part of the liquidator’s enquires. If the monies were taken by the directors personally and a preference has been given, we will explain to the director that these monies will need to be paid back to the company and will also go over the reasons why and what happens if the monies are not paid back.
We give precise and honest advice to the directors on the ramifications of their actions, which is what is needed in these very difficult times. For this reason, if bounce back loan monies have been used incorrectly, then it is vital to seek the advice of an insolvency practitioner and not to bury your head in the sand, as the problem will not go away.
This is the ideal time for directors to take advice from an insolvency practitioner and care should be taken when considering the best action to take when a company is financially struggling. DCA operate a freephone number and we are also able to hold meetings virtually, which will increase the scope for assisting any Directors that are facing financial problems, far and wide and DCA can be contacted on 0800 066 2544 7 days a week, from 8am – 8pm.
