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The bounce-back loan was introduced by the Government in March 2020 to assist those companies who have been affected by the Pandemic.  However, as the Pandemic continues a lot of businesses are finding that the bounce back loan and using the furlough scheme just isn’t enough.

At Adcroft Hilton we are seeing an increasing number of enquiries from directors who, in otherwise normal circumstances believe their business is viable, are concerned about the level of debt and how they will repay.   Whilst the Government has now announced extended terms and a further six-month payment break for bounce back loans, this doesn’t assist if the company has other existing debt.

In circumstances such as this, one of the options available to the director could be to propose a Company Voluntary Arrangement (‘CVA’) to the company creditors.  It is an Arrangement to pay creditors over a fixed period.  Alternatively, it could be based upon a lump sum payment being offered.  It is a legally binding agreement and if creditors agree to the proposal, the company can continue trading.  The proposals could even be put forward if there is currently no turnover or trading surplus to offer creditors at the moment.   Further information regarding CVA’s can be found here:

But what if the company is unlikely to survive?

Some of the enquiries we are receiving are from directors who took advantage of the bounce back loan scheme, however, now believe that the company is no longer viable.   In a lot of cases, the bounce back loan is the only debt outstanding (albeit, HMRC generally also have an outstanding debt).   In these circumstances, the director thinks that by dissolving the company via Companies House, this will then write off the loan for the company and given that the Government have guaranteed the Banks, the Bank will still receive their money back.

In reality, the bounce back loan is like any other debt and it is unlikely that Companies House will allow the company to dissolve.   Furthermore, whilst the Banks may be guaranteed by the Government they are still responsible for attempting to recover the loan themselves.

If the company does get dissolved, it may be reinstated by HMRC or the bank.  Therefore, the director is back to the same position.   In fact, we are aware that a number of banks are actively taking steps to reinstate companies that have taken out a bounce bank loan and subsequently dissolved.

In these circumstances, there is generally only one option and that is to place the Company into Creditors Voluntary Liquidation (‘CVL’) (  The appointed liquidator would then release any assets in the company to pay for the liquidation.   If the company has no assets, the director may be concerned that they cannot afford to place the company into CVL.  However, if the company has traded for longer than two years and the director has received their salary via the PAYE scheme, it may be possible for them to claim redundancy from the Redundancy Payments Service.

Further information regarding this and also the benefits of Liquidating a company rather than simply dissolving can be found here:

It is important to get advice from a Licensed Insolvency Practitioner like Adcroft Hilton as soon as the director believes that the company may be unable to repay any debts.  We offer free initial advice with no obligation.  If you are concerned and would like some advice please give us a call on 01253 299399.


Blackpool: 01253 299 399 | Carlisle: 01228 558 899