Bounce Back Loans Blocking Company Strike-Offs: A Growing Crisis for UK Directors

A staggering number of UK businesses are finding themselves in corporate limbo, unable to be struck off the Companies House register due to outstanding Bounce Back Loans (BBLs). Increasingly, directors are being forced to explain why their forecasted growth failed to materialise and account for where the loan funds have gone. According to the latest figures on the government’s website, the Bounce Back Loan Scheme paints a troubling picture:

  • £76.96 billion: Total drawn value of Bounce Back Loans
  • £1.88 billion: The outstanding balance of loans in arrears
  • £1.91 billion: Total drawn value flagged by lenders as suspected fraud (including BBLS and CBILS)

This has triggered a surge in insolvencies, where directors are facing intense scrutiny over their company’s financial affairs. The result? Many are at risk of being personally liable for the debts, particularly those with valuable assets such as homes, cars, or other personal holdings.

A Lifeline for Directors Facing Financial Ruin

For UK directors burdened by these looming liabilities, there is an alternative solution that could offer a vital lifeline. Rather than face the long and arduous process of insolvency, directors can legally sell their financially distressed limited company—even if it appears to have no value on paper. By doing so, they can exit the company, along with its debts, avoiding the personal and financial fallout that often accompanies insolvency.

The introduction of new directors and shareholders, who are not familiar with the company’s historical practices, effectively avoids the scrutiny usually applied by Insolvency Practitioners. The new directors and shareholders can legitimately claim no knowledge of past misdeeds or financial mismanagement, eliminating the basis for probing questions about past operations. This is particularly relevant for bounce-back loans and other unsecured borrowings. Bounce-back loans, introduced as financial support during challenging economic times, represent a significant liability for many businesses. Avoiding detailed investigations into the acquisition and management of these loans is a key advantage of this strategy.

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