Bounce Back Loan Advice Needed

Original Post:

maxheadroom

maxheadroom

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Jan 9, 2025
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  • #1
    In May 2020, I applied for a £15,000 Bounce Back Loan, which was approved instantly. The funds were used primarily for lead generation as business had slowed due to the pandemic. Unfortunately, this strategy didn’t work, and despite my best efforts, I had to cease trading in November 2020.

    In July 2020, I entered into a Trust Deed (the Scottish equivalent of an IVA). Shortly after, I submitted a DS01 to Companies House to dissolve the company, but the bank objected.

    Below is an excerpt from an email I sent to the bank in October 2021, after multiple phone calls and emails explaining the situation. By then, this was the sixth time I had explained my position, as the bank continued to pursue repayment of the loan:

    "The company has not traded now for nearly a year and is insolvent, with no income and no expected income. There are no funds to pay for liquidation and no assets.
    I personally have entered into a Trust Deed, so I am now in a payment arrangement with creditors. This is largely due to the failure of the company in question.
    I submitted a request to have the company struck off, but this was suspended in August—I assume this was your doing as there are no other creditors?
    I was assured by one of your advisors that the debt would be dropped since the company is no longer trading. However, we seem to be going around in circles.
    I have no way of entering a payment plan or making any other contribution towards this debt. The company is no longer trading, is insolvent, and unable to service its debt.
    There was no personal guarantee required for this loan. Had there been, it would have been covered by my Trust Deed, and you would have recovered some or all of your money."
    Click to expand...
    Now, in 2025, the bank is still pursuing me for this loan. I’ve explained the situation more than twenty times, but nothing seems to change. The last update I received was that they would “check in occasionally” to see if there were any updates to my situation.

    I even raised a harassment complaint last year, and they paid me £150 compensation, which seems an odd thing to do when pursuing someone for a loan.

    At this point, it seems they have no intention of letting this go. I’m looking for advice on my options:
    1. Should I appoint a liquidator to formally wind up the company?
    2. Am I legally liable for this loan, given that no personal guarantee was required?
    It’s my understanding that, since no personal guarantee was requested, the loan should remain a company debt, and the bank cannot pursue me personally. If they had required a guarantee, it would have been included in my Trust Deed, and they would have recovered some of the money.

    The company has not traded since November 2020, but I did open a new company which is still trading. Is this company in any way liable for the other company's debt? I know this can be the case with VAT debts.

    For context, when I took out the loan, I had no intention of entering into a Trust Deed. That decision was made after the business failed and was something I considered carefully.
     
    Solution
    ChrisCallaghan
    Hi @maxheadroom (great username!) and welcome to UKBF.

    The situation you find yourself is one that many small business owners are facing, and a scenario we see often here at UKBF.

    For now, any form of strike off/dissolution will not go through whilst there is an outstanding BBL, due to it being a government backed scheme. The bank may eventually cease objecting, and then the Department of Business and Trade (DBT) will continue objections, presently indefinitely. Myself (and others in my industry) expect that this won't last forever, but this has been the state of play for the better part of 4 years now, with no expectation for it to change any time soon.

    You are not personally liable for this loan, but so long as the...
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    ChrisCallaghan

    ChrisCallaghan

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  • #2
    Hi @maxheadroom (great username!) and welcome to UKBF.

    The situation you find yourself is one that many small business owners are facing, and a scenario we see often here at UKBF.

    For now, any form of strike off/dissolution will not go through whilst there is an outstanding BBL, due to it being a government backed scheme. The bank may eventually cease objecting, and then the Department of Business and Trade (DBT) will continue objections, presently indefinitely. Myself (and others in my industry) expect that this won't last forever, but this has been the state of play for the better part of 4 years now, with no expectation for it to change any time soon.

    You are not personally liable for this loan, but so long as the company continues to exists, you are contactable as the company's director and point of contact for debt collection activity.

    In short summary you have two options now, as you've hinted at in your post:
    1. Do nothing further, as you have already explained the situation which is not going to change, and accept that you may have unwanted contact occasionally.
    2. Instruct an insolvency practice to close the company via a Voluntary Liquidation
    Both options are perfectly valid ways to deal with your situation. If you would like to explore the liquidation process, myself (or any of the insolvency regulars here on UKBF) would be happy to offer you a free consultation to explore the process and provide a no obligation quotation.
     
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    Lisa Thomas

    Lisa Thomas

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  • #3
    IMO it's not worth paying to liquidate the company purely as a way to avoid harassment from the bank...Eventually it will be struck off and dissolved. Consider making another complaint, or ignoring/blocking their calls.
     
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    Pendulum

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    Mar 31, 2013
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  • #4
    In your position, I would do the following:

    1. Update the shareholder information to show the sole shareholder as "Share(s) Abandoned".
    2. If unwise enough to have put my home address on the public record at some point, ensure it is now fully removed/replaced with something else (harmless to others e.g. 1 The Street, Bigsmoke, EC1) as necessary.
    3. Resign directorship.
    4. Move on and stop worrying about it.
    5. If the bank ever contacted me again about it, send a reply to the effect I no longer have any connection to the company/any future correspondence will be considered harassment, resulting in formal complaint leading to an ombudsman case regardless of the offered resolution.
     
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    Lisa Thomas

    Lisa Thomas

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  • #5
    Pendulum said:
    In your position, I would do the following:

    1. Update the shareholder information to show the sole shareholder as "Share(s) Abandoned".
    2. If unwise enough to have put my home address on the public record at some point, ensure it is now fully removed/replaced with something else (harmless to others e.g. 1 The Street, Bigsmoke, EC1) as necessary.
    3. Resign directorship.
    4. Move on and stop worrying about it.
    5. If the bank ever contacted me again about it, send a reply to the effect I no longer have any connection to the company/any future correspondence will be considered harassment, resulting in formal complaint leading to an ombudsman case regardless of the offered resolution.
    Click to expand...
    Are you suggesting OP uses a fake address as the registered office?
     
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    P

    Pendulum

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  • #7
    Treat with contempt any system that treats you with contempt. Innocent OP has been trawled by an indiscriminate net meant to catch a different type of fish, and now OP is stuck in a limbo he/she ought not to be in. Sod the waste of space skins that made the critical decisions leading to this, and sod the stupid system that keeps him/her stuck in it.

    Remember my point no. 3? OP has legal right to do that anytime he or she so wishes. Were the OP to resign, then why the hell would he/she allow any of their personal details to remain in use by the company no longer of any connection or concern? As an unmanned company it would have no data controller, and so shouldn't be allowed to process or abuse the OP's data.

    Without a human director the company should be automatically shut down by Companies House. Whether that would happen or not, given the bounce back loan, is not known to me. If it would happen then the company is a dead man walking which doesn't need a real address because nobody would be interested in reading any correspondence sent to it, and if it wouldn't happen then it's a ghost ship in a hellish sea of irrelevance that also doesn't need a real address for correspondence, because there are no sailors aboard.

    How about this for a registered address then, "Zombie Company, Let Me Dissolve, First Circle of Hell"?

    Be strong and adapt OP. Don't be weak and continue to take this. Fight for your right to party, because nobody else will.
     
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    Mark T Jones

    Mark T Jones

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  • #8
    Pendulum said:
    Treat with contempt any system that treats you with contempt. Innocent OP has been trawled by an indiscriminate net meant to catch a different type of fish, and now OP is stuck in a limbo he/she ought not to be in. Sod the waste of space skins that made the critical decisions leading to this, and sod the stupid system that keeps him/her stuck in it.

    Remember my point no. 3? OP has legal right to do that anytime he or she so wishes. Were the OP to resign, then why the hell would he/she allow any of their personal details to remain in use by the company no longer of any connection or concern? As an unmanned company it would have no data controller, and so shouldn't be allowed to process or abuse the OP's data.

    Without a human director the company should be automatically shut down by Companies House. Whether that would happen or not, given the bounce back loan, is not known to me. If it would happen then the company is a dead man walking which doesn't need a real address because nobody would be interested in reading any correspondence sent to it, and if it wouldn't happen then it's a ghost ship in a hellish sea of irrelevance that also doesn't need a real address for correspondence, because there are no sailors aboard.

    How about this for a registered address then, "Zombie Company, Let Me Dissolve, First Circle of Hell"?

    Be strong and adapt OP. Don't be weak and continue to take this. Fight for your right to party, because nobody else will.
    Click to expand...

    It's like being in a pub with a very drunk student
     
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    Spongebob

    Spongebob

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  • #9
    There are tens of thousands of small companies with bounce back loans that are now insolvent and have ceased trading. Under normal circumstances they would have been struck off by Companies House years ago, but since the pandemic the government has not allowed this to happen.

    If the government allowed these companies to be struck off it would immediately crystalise the debt on the government balance sheet. Currently those debts are treated as assets!

    I don't expect this ever to be resolved. These debts will hang around indefinitely because no government is going to risk the bad publicity they would get if they wrote them off. Your company will probably be a zombie for the next 50 years.

    You've done everything right so far. Just bin the letters and don't answer the phone calls. There is literelly nothing they can actually do.
     
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    NickZ

    NickZ

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  • #10
    Spongebob said:
    There are tens of thousands of small companies with bounce back loans that are now insolvent and have ceased trading. Under normal circumstances they would have been struck off by Companies House years ago, but since the pandemic the government has not allowed this to happen.
    Click to expand...
    I'm pretty sure the government knows that. All they need is the number of the collected debt, that way it has an impact on the government's spreadsheet.
     
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    Paul Kelly ICHYB

    Paul Kelly ICHYB

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  • #11
    NickZ said:
    All they need is the number of the collected debt, that way it has an impact on the government's spreadsheet.
    Click to expand...
    Agreed, as long as the company is alive, there isn't a write off, so it does skew the figures.

    Maybe the government needs to write that off to give a more accurate figure on the counties accounts.
     
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    UK Contractor Accountant

    UK Contractor Accountant

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  • #12
    Strike off or non strike off it doesn't matter as the Insolvency Service still have powers to investigate BBL wrongdoing under Legislation passed in December 2021 the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021, which strengthened the government’s powers of investigation when a company is struck off while holding an outstanding Bounce Back Loan.

    I think a few Strike Offs slipped through at the start before the Government put a block on them.
     
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