Can You Strike Off A Company With A Bounce Back Loan?
Fast Liquidation Fact
Can you strike off a company with a bounce back loan instead of going into liquidation? No, you cannot strike off a company with a bounce back loan instead of going into liquidation. Whilst legally it is possible, currently the bank or the government will object and the strike off will be blocked.
Perhaps the most appropriate way to deal with an insolvent company that cannot repay its bounce back loan is for the director to opt for creditors voluntary liquidation. Attempting to bypass independent review of an unpaid bounce back loan by instead trying to use the strike off procedure may be unwise as it can highlight the issue all the more.
Why Is Voluntary Strike Off Appealing?
Voluntary strike off is appealing because it is a cheap procedure that, when done correctly, is quicker than going into liquidation. There is no liquidator appointed, which is why it is far less expensive.
What Is The Voluntary Strike Off Procedure At Companies House?
The voluntary strike off at Companies House, also known as dissolution, is a procedure using form DS01 to close down a company.
There are strict rules about striking off companies as to when this procedure can be used and what needs to be done. A key requirement is that every creditor needs to be sent a copy of the DS01 form within 7 days of it being sent to Companies House.
It is an effective procedure when a company is no longer trading and has no outstanding debts. It currently costs just £33 online to file the DS01 form.
What Happens If You Try To Strike Off With A Bounce Back Loan?
If you apply to strike off a company and it has an outstanding bounce back loan, the bank is likely to object to the application. When a creditor objects, Companies House will suspend the strike-off process. Currently, the objection is typically renewed every six months, meaning the company is not closed down and the directors are still responsible for administering the company, filing tax returns, accounts and confirmation statements each year.
A response to a Freedom of Information Act request to the British Business Bank dated 16 January 2023 suggested that the government had at that point raised 80,168 objections to attempts to strike off companies with bounce back loans.
An attempt to strike off a company with a bounce back loan could raise concerns with the Insolvency Service. There has been substantial fraud associated with bounce back loan applications and the use of the funds. This has meant they are routinely investigated whenever a company goes into liquidation.
Attempting to avoid such investigations or opting for a cheap company closure to bypass paying the bounce back loan by using the strike off procedure may raise the prospect of more in depth investigations.
Creditors Voluntary Liquidation
Although more expensive than striking off a company, if your company has a bounce back loan it cannot repay, then perhaps the appropriate way forward is creditors voluntary liquidation.
The process involves the appointment of a liquidator who is a licensed insolvency practitioner, such as Fast Liquidation’s Elliot Green, who can be appointed to wind up a company.
Whilst the bounce back loan is not written off in a liquidation, if the company has no assets, it will usually as a result go unpaid.
