Next steps with HSBC bounce back loan

[Callum97]

Hi there, I wonder if anybody else has been through this and can shed some light on it,

So we’ve been trying to save our business and we’ve come to terms to realise with world events we cannot continue the company is effectively dead as we sold a luxury not a need.

However HSBC have been very supportive and we told them we cannot pay and they said they do a long term no affordability. Send a few letters tick a few boxes they have said in a nutshell. The bounce back loan at the moment is on a payment holiday. So costing us very little a month. I have to give credit to HSBC and their support and advice. But it’s the question of how the company is closed

However when do we strike the company off normally my main question?

We have no money to liquidate and it and HSBC said they wouldn’t liquidate it either for a 12k bounce back loan. We had our total bounce back loan on designing a new product for our company and buying stock for it. Not ever used for personal consumption.

Will the company be left in limbo and then companies house eventually strike off, we owe nobody else apart from bounce back loan and I’ve put my own money into company to try and save it but we have to come to the terms that the world events cost of living have killed our business.

It’s a real heart breaking situation having owned this company since 2012: but the world has changed. I feel allot of hurt personally.

Thanks everybody.

Has anybody else been through the process?

 

[japancool]

they said they do a long term no affordability.

Sorry, what does this mean?

 

[Callum97]

Sorry, what does this mean?

It means they know they won’t get paid back and simply means “they accept the company can’t pay it back” from what I’ve been told.

 

[Gyumri]

Will the company be left in limbo and then companies house eventually strike off,

Yes. And they won't thank you for filing final accounts late by issuing a penalty of £750, so best to do nothing and think of some other way of making a living.

 

[Callum97]

Yes. And they won't thank you for filing final accounts late by issuing a penalty of £750, so best to do nothing and think of some other way of making a living.

I’m am going to put final accounts in, of course. I didn’t say I wouldn’t, just want I know how long until HSBC allow the company to be dissolved after? E.g. stop the objections, we owe nothing to anybody else.

I have now a full time job.

 

[Lisa Thomas]

FYI there is no point in filing the final accounts at Companies House if you are waiting for the company to be dissolved. Companies House will start the process for non filing of accounts.

 

[Frank Wessely]

Hi Callum97

Others in the forum have previously said that dissolution can take 18-24 months from the date of your application as the Bank will automatically object due to the o/s BBL, but that is not definite, it could be longer.

Alternatively as @Lisa Thomas says you can wait for Companies House to being the process, "wait" being the operative word.

The situation comes down to how quickly (or not) you want to resolve matters, given that you now have a full time job and as director you remain responsible for filings etc in the interim.

Thanks.

 

[JEREMY HAWKE]

@Frank Wessely
The other day on here (no time to look) A company was dissolved after the BBL bank "forgot" or over looked the strike off and missed it.
The company was struck off with the BBL still running is this a common occurrence?

 

[ChrisCallaghan]

As @Lisa Thomas and @Frank Wessely have indicated, if you have no affordability to cover the cost of a liquidation, then you are left with no alternative but to to wait for your company to be dissolved (whether you wait for Companies House to start this process due to no filing, or you initiate the process).

Unfortunately BBL lenders are still objecting to any form of strike off, and I now have several clients who are still waiting past 24 months for the BBL lender to cease objecting.

The other day on here (no time to look) A company was dissolved after the BBL bank "forgot" or over looked the strike off and missed it.
The company was struck off with the BBL still running is this a common occurrence?

Definitely not the norm, but for those who can't afford to cover the cost of the liquidation, they can always hope that it slips through the net. It happened quite often in 2020, but I've not spoken to anyone who's managed this in quite a while.

 

[Frank Wessely]

@Frank Wessely
The other day on here (no time to look) A company was dissolved after the BBL bank "forgot" or over looked the strike off and missed it.
The company was struck off with the BBL still running is this a common occurrence?

Not in my experience. It appears to be an isolated incident.

Thanks.

 

[CAL2003]

Hi there, I wonder if anybody else has been through this and can shed some light on it,

So we’ve been trying to save our business and we’ve come to terms to realise with world events we cannot continue the company is effectively dead as we sold a luxury not a need.

However HSBC have been very supportive and we told them we cannot pay and they said they do a long term no affordability. Send a few letters tick a few boxes they have said in a nutshell. The bounce back loan at the moment is on a payment holiday. So costing us very little a month. I have to give credit to HSBC and their support and advice. But it’s the question of how the company is closed

However when do we strike the company off normally my main question?

We have no money to liquidate and it and HSBC said they wouldn’t liquidate it either for a 12k bounce back loan. We had our total bounce back loan on designing a new product for our company and buying stock for it. Not ever used for personal consumption.

Will the company be left in limbo and then companies house eventually strike off, we owe nobody else apart from bounce back loan and I’ve put my own money into company to try and save it but we have to come to the terms that the world events cost of living have killed our business.

It’s a real heart breaking situation having owned this company since 2012: but the world has changed. I feel allot of hurt personally.

Thanks everybody.

Has anybody else been through the process?

I'm in exactly the same boat, also with HSBC actually, although I've not yet formally informed them that I won't be able repay the BBL in full. My Ltd company's BBL was for 50k but prior to Covid we were doing well enough to be eligible for that. But despite hanging in there for as as long as possible, we haven't bounced back to anywhere near those levels. Just coming up now to a year of interest only monthly repayments, which has been manageable with the small profit being made each month currently, but the writing's on the wall long term and it won't really be worth carrying on once the capital repayments kick in.

I can't really afford a liquidation, so the question for me is if once the company goes into strike off limbo, could I then still continue to trade through a different Ltd company? This would very much just be a part-time thing as profit now really is peanuts in the big scheme of things, but it could be a much needed top up to whatever other 9-5 job I have to end up taking.

Just wondering if any of the insolvency experts on here could confirm where I would stand on that? I don't want to cause myself any problems down the road.

 

[ChrisCallaghan]

once the company goes into strike off limbo, could I then still continue to trade through a different Ltd company?

You certainly can. Just to help a bit further, can I ask if there any assets left in the old company that you plan on taking into any new company?

I can't really afford a liquidation

Do you mind me asking what sort of quotations you have been given?

 

[CAL2003]

Thanks Chris, its very much a working on a laptop from the kitchen table type online business, so no fixed assets etc other than cash in the bank (rapidly dwindling). I would be looking to deal with some of the same customers and suppliers via the new company though....would that be an issue if waiting for strike off?

Having lurked on here for a while, I understand that the starter fee for a liquidation would be approx 4-5k ? The company doesn't have that, so obviously the end of the road is near.

By the way, I should have mentioned that the BBL is the company's only debt.

 

[Callum97]

FYI there is no point in filing the final accounts at Companies House if you are waiting for the company to be dissolved. Companies House will start the process for non filing of accounts.

Thanks Chris, its very much a working on a laptop from the kitchen table type online business, so no fixed assets etc other than cash in the bank (rapidly dwindling). I would be looking to deal with some of the same customers and suppliers via the new company though....would that be an issue if waiting for strike off?

Having lurked on here for a while, I understand that the starter fee for a liquidation would be approx 4-5k ? The company doesn't have that, so obviously the end of the road is near.

By the way, I should have mentioned that the BBL is the company's only debt.

No overdraft?

 

[ChrisCallaghan]

I would be looking to deal with some of the same customers and suppliers via the new company though....would that be an issue if waiting for strike off?

So long as those suppliers aren't creditors of the old company, and you are clear with everyone about the new company you are working through (so new accounts with suppliers, invoices to customers under the new company name, new contacts with your customers if applicable etc) then you should be fine.

Having lurked on here for a while, I understand that the starter fee for a liquidation would be approx 4-5k ? The company doesn't have that, so obviously the end of the road is near.

By the way, I should have mentioned that the BBL is the company's only debt.

Not far off. I'll private message you shortly what I would typically quote for Voluntary Liquidation. If there is nothing/very little left in the company, I would understand why you would choose the strike off route. Recently I've seen an increase in directors in your situation choosing to privately fund a liquidator's fee due to strike offs with BBLs taking 24 months plus at the moment. If you reconsider I would be happy to help, otherwise I wish you the best of luck with your strike off application.

 

[CAL2003]

Thanks Chris, appreciated.

As long as I can still legitimately trade part-time in the same industry via a new company in the meantime, then I'm not too concerned about the strike-off timescale assuming the end result is the same.

Are there any set procedures I will have to follow before / after closing the old company? I saw somewhere that I need to have had stopped trading for 3 months before submitting the strike off application....is that correct?

 

[ChrisCallaghan]

Are there any set procedures I will have to follow

Spmgebob's guide on this forum is tried an tested. See below:

CLOSING A LIMITED COMPANY WTH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER

CLOSING AN INSOLVENT LIMITED COMPANY WITH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER If a company is unable to carry on trading due to becoming insolvent the standard procedure for closing it down is for the directors to appoint an Insolvency Practitioner to liquidate it...

www.ukbusinessforums.co.uk

 

[ChrisCallaghan]

Thanks Chris, appreciated.

As long as I can still legitimately trade part-time in the same industry via a new company in the meantime, then I'm not too concerned about the strike-off timescale assuming the end result is the same.

Are there any set procedures I will have to follow before / after closing the old company? I saw somewhere that I need to have had stopped trading for 3 months before submitting the strike off application....is that correct?

Quite correct. This is summarised in SpongeBob's guide above, but it is also essential that you write to creditors to inform them. I've seen a few recently published director bans from the Insolvency Service that have penalised directors who've failed to do this.

 

[CAL2003]

Thanks Chris, I'll check that guide, but just to wrap up here, in essence its a case of the following...?

1) Inform Bank regards BBL & formally notify any other parties the company deals with that it will be ceasing to trade.
2) Cease trading & activity for 3 months
3) Submit strike-off application at companies house.

And just to clarify, after the first 2 steps are taken, I don't have to wait until step 3 before I can start trading in same field via different company?

 

[Callum97]

Quite correct. This is summarised in SpongeBob's guide above, but it is also essential that you write to creditors to inform them. I've seen a few recently published director bans from the Insolvency Service that have penalised directors who've failed to do this.

If you only have me creditor like HSBC for bounce back loan surely phone conversation is suffice?

 

[ChrisCallaghan]

I don't have to wait until step 3 before I can start trading in same field via different company?

Correct

If you only have me creditor like HSBC for bounce back loan surely phone conversation is suffice?

I believe it has to be a letter to creditors. Unsure if it has to be a posted letter or whether an email could be considered acceptable. Personally I'd recommend both, just to cover yourself.

 

[Callum97]

Just spoke to Lisa, I am exceptionally impressed with her guidance and advice on the matter - of what to do on the bounce back loan O/S and how best to route through it.

 

[Lisa Thomas]

Thanks Callum. You are welcome. Best of luck.

 

[Callum97]

Hi Lisa,

Would it help if I resigned as a director of the company as well? I should of asked you that today the only question I forgot I ask you earlier

 

[Lisa Thomas]

I would not recommend that. I don't believe you're allowed to leave a company directorless, and it will leave you powerless to do anything.

 

[Callum97]

I would not recommend that. I don't believe you're allowed to leave a company directorless, and it will leave you powerless to do anything.

Ok no problem.

 

[CAL2003]

Just a bit of extra info needed please....Its now been over 3 months since my company ceased trading due to BBL debt, so I’m at the stage now of looking to move forward with informing HSBC of my intention to apply for DS01 strike-off. In the interim though, a delayed refund has been received from HMRC for a PAYE/NIC overpayment, but this has been paid into a different bank account that the company has. I understand that account will need to be closed down after the DS01 application, but is it still ok to transfer the refund to HSBC before then?

Its a drop in the ocean obviously in the big scheme of things, but it would temporarily clear the current deficit from the missed BBL payments. I still intend to apply for the DS01 after that.

 

[UK Contractor Accountant]

I still intend to apply for the DS01

i wouldn't bother sending in - all Strike Off applications with BBL outstanding are being thwarted ...... Government Directive.

You will have to wait at least year from the date you receive the demand to repay the BBL in full following default. That's the timescale the Government have given for lenders to chase repayment of the BBL.

 

[CAL2003]

You're right, it will go into long term limbo I know. I presume I'm allowed to move the HMRC refund money to them in the meantime though before submitting a DS01?

 

[Frank Wessely]

I don't see why not if the bank is the only creditor. I assume that you aren't owed any back pay, etc?

Or you could use the funds to cover the fees of an IP to wind up the company. (I would say that, wouldn't I.

---

 

[CAL2003]

Hi Frank, yes they're the only 3rd party creditor, although actually yes I am owed a similar amount by the company as remaining balance on a loan I made into the company a few months ago. I assumed paying myself that would be less acceptable in the circumstances rather than just letting the bank keep it. Its 'only' £400 though so I don't want to cause myself any problems.