Bounce Back Loan

wildheart83

I'm a company director and during the pandemic my contract was cut basically in half so I took out a bounce back loan. I am now looking at closing the limited company as I'm not trading and it's costing me money to have things like my business account open and paying for an accountant etc. 
There's not enough money in the business account to pay the BBL in full, it's short by about £4.5k and my accountant has been clear that I can't close the company down until this has been paid off. I asked Barclays if I can make the repayments from my personal account and they couldn't advise until I let it go to collections but that they can't stop me from closing the business account. 

I am trying to work out the best way forward - do I close the business account and let it go to collections in the hope I can pay instalments from my own account? Or do I offer what's left in the business account as a full and final settlement - £2.3k of a £6.8k loan? Or do I keep everything open and keep transferring money into the business account from personal to pay the monthly instalments until it's repaid? I'm not sure if I'm allowed to do that. 

I spoke to business debtline, who advised going for liquidation (this was before corporation tax was due) and not paying anything that was due but a liquidation company advised against this so I'm a bit stuck.

Jeremy535897

The simplest solution is to transfer sufficient funds from your personal account to the company account (as a director's loan) to settle the BBL and any other creditors, pay them off, and then the company will be dormant. You can have it struck off in due course.

wildheart83

Jeremy535897 said:

The simplest solution is to transfer sufficient funds from your personal account to the company account (as a director's loan) to settle the BBL and any other creditors, pay them off, and then the company will be dormant. You can have it struck off in due course.

I should have said, I don't have sufficient funds in my personal account to settle the BBL either, it would be a case of transferring money each month to cover the monthly repayment. It's likely the ltd company will sit dormant for years before I can settle the BBL 

Jeremy535897

It sounds as if the company is insolvent, and so it may well be that the only practical course of action is a liquidation. If the company has debts other than the BBL (for example corporation tax), the liquidator can allocate the remaining funds as required. There is no recourse, in normal circumstances, to you in respect of company debts that you have not personally guaranteed.

wildheart83

Thanks for your reply. The only debt is the BBL,  everything else including corporation tax has been paid and I’ve not traded in a year

Grumpy_chap

OP - if not looking to resurrect your Ltd Co, what do you plan to do for on-going income?

There are pay-as-you-grow options that allow some short-term relief to the BBLS repayments (though the costs overall will increase).  These could be worth consideration if you are expecting your income level to recover within a reasonable time frame.

Although the BBLS could not have a personal guarantee, there were rules as to how the funds could be spent (for the economic benefit of the business).  It is possible that the bank will seek demonstration of that before they accept the fund being written-off.

wildheart83

I’ve gone PAYE so I’m not looking to utilise the pay as you grow option. The BBL was used legitimately to pay overheads etc. I’m not looking to just stop paying. Barclays obviously won’t suggest anything that would result in them not getting the balance paid in full, and my accountant isn’t overly helpful 

Jeremy535897

It seems clear that the company is insolvent, as its BBL debt exceeds its resources, and it has no means of changing that position, other than you voluntarily adding funds over what may be a considerable period of time. You might explain to Barclays that whilst you are prepared to consider repaying the BBL over time from personal funds, you are not prepared to fund unnecessary bank costs as well. If they cannot come up with a simple solution to enable you to repay the BBL, say to them that the only other option is liquidation, which will see them lose both the business banking fees and the BBL itself (which they could recover from the government, but they may be unsympathetic if they learn the bank cut off its nose to spite its face).

wildheart83

Thanks, this is really helpful information