Bounceback loan disolved Limited company repay advise

Barneybear2015

Hi everyone,
This is a complicated one!!
I had a small limited company for 2 years, the accountant that i used at the time, lost my account records and did not submit to companies house resulting in a companies house fine of £750. 

I applied for voluntary dissovlment on 31/2/2020 as advised by companies house and my accountant to move to a sole trader, no outstanding debit to anyone just a simple move to sole trader as not needed to be a limited company.

Then Covid 19 kicked in and held everything up from companies house side and banks not allowing to opening business bank accounts.

I have kept in touch with companies house in regards about shutting the account down and was advised that because of Covid 19, people working from home etc things are being held up. Totally understandable.

 Letter from Companies House is dated Friday 18th September and did not arrive until Tuesday 22nd September, the day the company was dissolved, blocking my bank account,  giving me no time to lift the money from the account. Company House they told me they would give plenty of notice.

I had let companies house aware of the opening bank situation and they told me they would give plenty of notice when the company being shut. I would then be able to use my personal account until i could get a business bank account opened, as agreed with my new accountant.

The monies in bank account £6500 has been sent to the Crown Treasury and now need a High court writ to claim this money back, at a cost of approx £2000.

£6000 of the money is a Bounce back loan, aquired in April 2020

Would the £6000 bounce back loan be dead with the limited company or will it be personal so I would have to pay it back?

Any advise on my next move would be very much appreciated

MattMattMattUK

Barneybear2015 said:

Hi everyone,
This is a complicated one!!
I had a small limited company for 2 years, the accountant that i used at the time, lost my account records and did not submit to companies house resulting in a companies house fine of £750. 

I applied for voluntary dissovlment on 31/2/2020 as advised by companies house and my accountant to move to a sole trader, no outstanding debit to anyone just a simple move to sole trader as not needed to be a limited company.

Then Covid 19 kicked in and held everything up from companies house side and banks not allowing to opening business bank accounts.

I have kept in touch with companies house in regards about shutting the account down and was advised that because of Covid 19, people working from home etc things are being held up. Totally understandable.

 Letter from Companies House is dated Friday 18th September and did not arrive until Tuesday 22nd September, the day the company was dissolved, blocking my bank account,  giving me no time to lift the money from the account. Company House they told me they would give plenty of notice.

I had let companies house aware of the opening bank situation and they told me they would give plenty of notice when the company being shut. I would then be able to use my personal account until i could get a business bank account opened, as agreed with my new accountant.

The monies in bank account £6500 has been sent to the Crown Treasury and now need a High court writ to claim this money back, at a cost of approx £2000.

£6000 of the money is a Bounce back loan, aquired in April 2020

Would the £6000 bounce back loan be dead with the limited company or will it be personal so I would have to pay it back?

Any advise on my next move would be very much appreciated

I believe that you, if you are the director (as well as any other directors), then you would be personally liable for the loan as you applied for the BBL after applying for dissolution of the company which in breach of the terms of the scheme. At best you will likely be held personally liable, at worst it could be deemed fraud.

Jeremy535897

The date you give for applying for voluntary liquidation does not exist, so there is a typing error there. What is the correct date?

Barneybear2015

Sorry 31/1/2020

Grumpy_chap

You need to repay the bounce back loan.

I am actually surprised that the company was able to be dissolved with a remaining debt outstanding
.
In fact, if you applied to dissolve the company in February 2020, then the Ltd Co should not have been eligible for a BBLS as one of the criteria is that the business is "engaged in trading activity" and this is not "in bankruptcy, liquidation or similar" so the incorrect statement must has been made as part of the application, even simply incorrect tick-boxes.  By the time BBLS was announced, this Ltd Co. was not really still in anything other than suspended existence.

In the worst case, the above could be interpreted as fraud.  As Director, you remain responsible for the actions of the Ltd Co. and will very likely be held personally liable.  If the loan is simply repaid, then I doubt anything more will come of that aspect, despite whatever errors may have been made - try to repay the loan quickly so that interest does not get added once the first year is passed and before any direct debits are taken (or tried to be taken).  As soon as the lender finds they can't administer the loan and claim the expected payments, that will start things being looked at - clear it all before then and stay off radar.

As for things happening quick so that money got locked in the bank, I do not know how this process works, but you applied for strike off in February and it did not process until September - that is quite a lot of notice to close things down.  It sounds like you had some poor advice from the first Accountant - what does your new Accountant now advise?

macman

Why have you not pursued a claim against your original accountant for his incompetence?

MattMattMattUK

Grumpy_chap said:

I am actually surprised that the company was able to be dissolved with a remaining debt outstanding

BBLs do not show/are not registered as a charge on Companies House, so if it was not mentioned in the winding up resolution and supplementary details then Companies House would have no way of knowing about it at that point in time.

Grumpy_chap

MattMattMattUK said:

Grumpy_chap said:

I am actually surprised that the company was able to be dissolved with a remaining debt outstanding

BBLs do not show/are not registered as a charge on Companies House, so if it was not mentioned in the winding up resolution and supplementary details then Companies House would have no way of knowing about it at that point in time.

Hmm, the winding up resolution was January 2020, several months before BBLS were even a "thing".
Proof positive that the BBLS really should never have been applied for and the risk of fraud.
Can only encourage the OP to repay the BBLS before the interest-free period ends and the lender starts to try to take monthly direct debits as, once that fails, this will be looked at closely and there is no knowing which way things progress, but it will be out of the OP's hands to a large degree.

MattMattMattUK

I agree, they have been awfully implemented, the current estimates are that around 60-70% will not be repaid means that with total lending at around £50 billion that is not an insignificant cost to the taxpayer, especially when many of those businesses never had any realistic prospect of repaying the loans in the first place. 

As for the OP, yes, repayment would seem to be the best option as otherwise it would appear that their application would be deemed fraudulent and they will be personally liable for the debt anyway.

Grumpy_chap

MattMattMattUK said:

I agree, they have been awfully implemented, the current estimates are that around 60-70% will not be repaid 
especially when many of those businesses never had any realistic prospect of repaying the loans in the first place. 

I don't think we can entirely blame the Government for this.  The initial loans scheme CBILS excluded small business because Rishi said precisely because it was too difficult and would they repay?  Then commentators in the press and opposition (but not actually HM Official Opposition) bleated that was unfair and something had to be done to not differentiate between small business and large business.  That was responded to and now the same commentators and opposition (including HM Official Opposition) are now berating the scheme as flawed.  Who'd want to be the Government, eh?

Barneybear2015

Grumpy_chap said:

You need to repay the bounce back loan.

I am actually surprised that the company was able to be dissolved with a remaining debt outstanding
.
In fact, if you applied to dissolve the company in February 2020, then the Ltd Co should not have been eligible for a BBLS as one of the criteria is that the business is "engaged in trading activity" and this is not "in bankruptcy, liquidation or similar" so the incorrect statement must has been made as part of the application, even simply incorrect tick-boxes.  By the time BBLS was announced, this Ltd Co. was not really still in anything other than suspended existence.

In the worst case, the above could be interpreted as fraud.  As Director, you remain responsible for the actions of the Ltd Co. and will very likely be held personally liable.  If the loan is simply repaid, then I doubt anything more will come of that aspect, despite whatever errors may have been made - try to repay the loan quickly so that interest does not get added once the first year is passed and before any direct debits are taken (or tried to be taken).  As soon as the lender finds they can't administer the loan and claim the expected payments, that will start things being looked at - clear it all before then and stay off radar.

As for things happening quick so that money got locked in the bank, I do not know how this process works, but you applied for strike off in February and it did not process until September - that is quite a lot of notice to close things down.  It sounds like you had some poor advice from the first Accountant - what does your new Accountant now advise?

Thanks for the advise.
When the application for voluntary disolvement in Febuary happened covid kicked in stopping both me opening a new sole trader bank account ( banks were not opening accounts ) and companies house desolving the company. We had great communication with companies house about going forward and they didnt know when it would happen because people working from home etc etc. They told me they would give me a weeks notice to move my money to a personal account, ( until i can open a business account ). The letter was dated friday 18th arrived Tuesday 22nd, I got home from work to the letter, phoned the bank the next day but account was shut on tuesday 22nd and money sent to the Crown solicitor. This is where i'm annoyed!!
Yeah my first accountant has put me in this hole, but as companies house told me several times i'm the director of the company so the buck stops with me. I was going down the small claims court route with the first accountant but he said he didnt recieve any documents / reciepts from me and I have no evidence Ieft them with him.
My new accountant has pretty much said what your saying, that its fraud from my side but also the bank should have done proper due diligence. But I am liable to pay it back.