bounce back loan debt recovery

littlelotto

Hi there.
So I've been contacted by Moorcroft Debt recovery for a bounce back loan taken out during covid lockdown.
As short as I can be.
The loan was taken out to fund a new work from home business that I had been researching for approximately 3 years.
In the end the venture failed, and I took advice to declare bankruptcy.
Having done so, I contacted companies house to ask advice with regards to the limited company, and as I was bankrupt, I was firstly told I could no longer be a director of the company, and told to resign, which I did. Having done so though, I again contacted companies house and they told me as I had resigned, I had no authority to make changes or dissolve/ close the company.
This was a shock as it was they who had advised I must resign. But they said I could simply wait, and ignore filing letters, and they would essentially strike the company off.

So I waited and forgot about it, as the letters came, and I expected the company would be struck off. 
Forward a year, and I start to get reminders, so I go onto the website and find that the company is still active.
After a quick call to companies house, I find out that the bank had objected to the striking off, and so companies house would not move to strike the company off with an active objection.
I was told to phone the bank and explain and ask for them to remove the objection, which the bank then replied and said, as soon as companies house strike the company off, they will remove the objection.
Over a period of a year, I spoke to the bank numerous times, as well as companies house, neither would budge, and I have zero authority to change anything to do with the company.

All money received from the bounce back loan was used for company expenses, I never drew any salary or funds, all this was reported by the accountant.

However, as the bank wont budge, or companies house, I am now facing this debt recovery for a company that has not traded in over 4 years.

All I see now is a debt recovery agent who is after the money, any ideas on what I could do?
financial Ombudsman? 

MattMattMattUK

littlelotto said:

Hi there.
So I've been contacted by Moorcroft Debt recovery for a bounce back loan taken out during covid lockdown.
As short as I can be.
The loan was taken out to fund a new work from home business that I had been researching for approximately 3 years.
In the end the venture failed, and I took advice to declare bankruptcy.
Having done so, I contacted companies house to ask advice with regards to the limited company, and as I was bankrupt, I was firstly told I could no longer be a director of the company, and told to resign, which I did. Having done so though, I again contacted companies house and they told me as I had resigned, I had no authority to make changes or dissolve/ close the company.
This was a shock as it was they who had advised I must resign. 

They were correct, as a bankrupt you cannot be a director of a Limited company. The shareholders (you) should have called an EGM and appointed a new director.

littlelotto said:

But they said I could simply wait, and ignore filing letters, and they would essentially strike the company off.

In theory, provided there are no debts, if there are debts then those owed money can stop the process.

littlelotto said:

So I waited and forgot about it, as the letters came, and I expected the company would be struck off. 
Forward a year, and I start to get reminders, so I go onto the website and find that the company is still active.
After a quick call to companies house, I find out that the bank had objected to the striking off, and so companies house would not move to strike the company off with an active objection.
I was told to phone the bank and explain and ask for them to remove the objection, which the bank then replied and said, as soon as companies house strike the company off, they will remove the objection.
Over a period of a year, I spoke to the bank numerous times, as well as companies house, neither would budge, and I have zero authority to change anything to do with the company.

Again, they are correct, you have no authority, if you are still a shareholder, eg. the shares were no confiscated during the bankruptcy process, then you need to appoint a director. Or just ignore it.

littlelotto said:

All money received from the bounce back loan was used for company expenses, I never drew any salary or funds, all this was reported by the accountant.

The bank may dispute if those expenses were legitimate and if you were compliant with the terms of the BBL when you took it out, it sounds like you took they money to use as start-up capital for a business that had not actually been trading, if that is correct then your application would be deemed fraudulent and you would be personally liable for the debt. 

littlelotto said:

However, as the bank wont budge, or companies house, I am now facing this debt recovery for a company that has not traded in over 4 years.

You cannot face debt recovery for the debts of a Limited company, you and it are separate legal entities, unless the bank deemed your BBL application fraudulent, then you become personally liable (although it is slightly more complicated than that).

littlelotto said:

All I see now is a debt recovery agent who is after the money, any ideas on what I could do?
financial Ombudsman? 

You first need to figure out who they are chasing, if it is LittleLotto Limited then that is different to if they are chasing Mr/Mrs Little Lotto, what legal entity was named on the application of the BBL and was it fully compliant with the rules? 

Bradden

The bank may dispute if those expenses were legitimate and if you were compliant with the terms of the BBL when you took it out, it sounds like you took they money to use as start-up capital for a business that had not actually been trading, if that is correct then your application would be deemed fraudulent and you would be personally liable for the debt. 

I was thinking the same..  surprised the OP was successful with the loan application. in my experience it wasn't easy. 

MattMattMattUK

Bradden said:

The bank may dispute if those expenses were legitimate and if you were compliant with the terms of the BBL when you took it out, it sounds like you took they money to use as start-up capital for a business that had not actually been trading, if that is correct then your application would be deemed fraudulent and you would be personally liable for the debt. 

I was thinking the same..  surprised the OP was successful with the loan application. in my experience it wasn't easy. 

I think it depends on the banks, some applied reasonable levels of verification, others pretty much just handed them out based on whatever the person put on the application form.

I took one out for my business and repaid it before any interest was due as a potential safety net (but in reality it was not much use, I know plenty of people who used them to refinance other, more expensive finance options. The application was not exactly detailed though, no requirement to verify turnover etc. and from memory that is the experience of friends. Remember that 20-30% of the applications for BBLs were entirely fraudulent, the company was not real, or the person who got the loan was not the owner/operator of the business but a random fraudster.