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Striking off a company with an unpaid BB loan

Striking off a company with an unpaid BB loan

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This is starting to crop up a bit now, we have certain directors / shareholders wanting to strike companies off that have had bounce back loans and not repaid them, in some instances the directors just grabbed the cash (overdrawn DLA, one off salary payments etc.). Should a company director take matters into their own hands and strike a company off at Companies House is there any mechanism that would prevent this, is there a checking system for bounce back loans. I'm hearing the my mate wrote his company off stories from some of these directors.

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RLI
By lionofludesch
22nd Apr 2021 10:49

If they're insolvent, surely you can't strike them off.

It's the creditors' decision.

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By Paul Crowley
22nd Apr 2021 11:31

To comply with the law
Directors must advise all people company owes money to of their intension
But Co house do not care and informing them that directors did not advise is a waste of time
MDTP is talking out of his rear
Companies house are stopping strikes off due to covid anyway
Former client had BB and clearly bank has objected so:
Voluntary strike-off action has been suspended
Co house state an objection has been received

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By CW2012
22nd Apr 2021 11:03

I'm thinking of the businesses that don't operate in the appropriate manner and just file a DS01 at Companies House, the HMRC would normally object if they were owed anything but if the only balances of note were O/D DLA and a Bounce Back Loan, is there a checking system against companies that are applying to be dissolved without repaying their loans.

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Replying to CW2012:
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By Tax Dragon
22nd Apr 2021 11:14

CW2012 wrote:

I'm thinking of the businesses that don't operate in the appropriate manner.

Are you looking to police businesses you see not operating in the appropriate manner, or assist them in so (not?) operating?

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Replying to Tax Dragon:
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By CW2012
22nd Apr 2021 11:41

I'm certainly not thinking of assisting them in closing down the companies to avoid repaying the BB Loan, I just wanted to know if there was anything that would stop this happening so that the next clients who says "my mate shut his company and they had a £50k loan and he just took the money, why cant I" I want to shut this conversation down straight away, if there's a blocking process that I can quote that would really help.

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Replying to CW2012:
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By Paul Crowley
22nd Apr 2021 11:50

Ask who the mate was and look the company up

Client will go quiet would be my expectation

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Replying to CW2012:
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By Paul Crowley
22nd Apr 2021 11:39

Banks should be checking gazette notices
They did on the company I referred to
But I note that the DSo1 was submitted by the new agent
A firm of Chartered Accountants
Shame on them

On public record

Person named on DS01 as person submitting was the firms marketing coordinator

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Mike Cooper HJS
By mike_uk_1983
22nd Apr 2021 11:30

Surely in doing so the directors may well be in breach of their duties and terms of the loan and some come back on them but only if anyone challenges it which would need to be the bank as no one else has an interest.

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By Duggimon
22nd Apr 2021 12:17

Any responsible lender such as a bank will be checking the list of gazette notices against their debtors and objecting.

If the balances are Dr DLA and Cr BB Loan, the bank can, should, and probably will recover the loan from the director.

Perhaps these "mate wrote his company off stories" are from mates who don't understand the process and think they have struck off their companies when in fact they have filed a DS01 and could yet get the objection and subsequent legal proceedings any day now.

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By legerman
22nd Apr 2021 12:53

If a Company attempts to strike off using DS01 and a Director has helped themselves to the BBL, they can be personally liable for the debt, as it is an asset

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By colinhigginson
22nd Apr 2021 14:43

Just out of interest why would the banks be checking the London Gazette?
All the banks will do is bill the Treasury for any unpaid BBL's.
My understanding is that the government have seconded one of the big four to scour the London Gazette for any DS01's and they will object to it. The firm in question also request anonymity so if you ask Companies House who objected you will not find out.

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Replying to colinhigginson:
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By DaveyJonesLocker
22nd Apr 2021 15:38

I've come across this as a client went personally bankrupt then wanted me to submit a DS01 without telling the bank. Needless to say I didn't, the client did submit one himself then I can see someone HAS objected.

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Replying to colinhigginson:
RLI
By lionofludesch
22nd Apr 2021 16:00

colinhigginson wrote:

Just out of interest why would the banks be checking the London Gazette?
All the banks will do is bill the Treasury for any unpaid BBL's.
My understanding is that the government have seconded one of the big four to scour the London Gazette for any DS01's and they will object to it. The firm in question also request anonymity so if you ask Companies House who objected you will not find out.

The company might have accounts besides the BBL.

Those will need closing and the money sending to the Queen.

In my experience - as well as anecdotal evidence - the banks do this pretty quickly. I recon they have a chap reading the London (and Edinburgh) Gazette all day. Full time job.

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Replying to colinhigginson:
Stepurhan
By stepurhan
22nd Apr 2021 18:01

colinhigginson wrote:

Just out of interest why would the banks be checking the London Gazette?
All the banks will do is bill the Treasury for any unpaid BBL's.


I thought the banks had to show they had taken reasonable actions for recovery before they could claim the government guarantee.

If so, then one would think ensuring a company was not struck off while owing the loan would be a basic requirement for that.

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Replying to stepurhan:
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By Paul Crowley
22nd Apr 2021 20:08

+1

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Replying to stepurhan:
Kitten
By Hazel Accounts
22nd Apr 2021 21:47

I'm fairly sure I recently read somewhere that one of the banks (HSBC?) was taking on 400 extra staff to recover BBLs.

I hope that the government won't just be handing over the guarantee money to the banks without some sort of checks.

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Replying to stepurhan:
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By CW2012
22nd Apr 2021 22:28

Good point, I hope that the banks act with appropriate dilligence.

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By sanjay100
22nd Apr 2021 17:01

Unfortunately there are just too many BBL cases where directors have taken loans when they some have only recently setup a business and intention is clearly fraud.

Will not be possible to go after everyone

I heard one guy my client knew had four companies that were dormant claimed 50K for each company and is now in Turkey enjoying himself.

I could give some more examples but just winds me up so think I need to stop there

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Replying to sanjay100:
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By CW2012
22nd Apr 2021 17:31

The trouble is these kind of antics encourage others, some of which have come knocking on our door, I've heard this dormant company story elsewhere, was there no activity checking before hand, I thought the loan was set at a limit of a proportion of turnover.

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Replying to CW2012:
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By Paul Crowley
22nd Apr 2021 20:12

It was workable at first when only the client bankers could give it. There could read the bank statements
Then when any bank could shell out money............

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Replying to sanjay100:
RLI
By lionofludesch
23rd Apr 2021 07:17

sanjay100 wrote:

I heard one guy my client knew had four companies that were dormant claimed 50K for each company and is now in Turkey enjoying himself.

I could give some more examples but just winds me up so think I need to stop there

Stop listening to these urban myths, Sanjay.

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Replying to lionofludesch:
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By sanjay100
23rd Apr 2021 10:40

with due respect I think your head in the clouds if you think this is not happening. Its a massive scandal and most of the loans will end up being written off.

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Replying to sanjay100:
Stepurhan
By stepurhan
23rd Apr 2021 11:31

Unless you are able to provide a reliable source then "I heard one guy" is just MDTP talk.

I'm sure there will be problems with the loans, but anecdotes are not proof of how serious those problems are.

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Replying to stepurhan:
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By sanjay100
23rd Apr 2021 15:26

I have turned away clients who have taken 50K bounceback loans where their turnover was £100K or less.

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Replying to sanjay100:
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By Paul Crowley
23rd Apr 2021 14:19

Rubbish
I would be amazed if as many as 5% ever get written off
That may be demi-decimation but the only person trying it so far that I am aware of has received an objection.
My guess is that maybe 50 clients got BBLs
Only that one former client has tried and failed
I do not expect any other current clients to attempt any such action

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Replying to Paul Crowley:
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By sanjay100
23rd Apr 2021 15:24

You are being very naive if you think only 5% will be written off. UK banks and National Audit Office have estimated about 40% of the loans will get written off. I personally think it will be higher. It was just free money for many without any checks whatsoever. Of course people would take it. Many start ups and small businesses have taken without even the intention of paying it back especially in the construction industry.

Why do you think there is housing boom and its not just due to the stamp duty.

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By gigagirl
23rd Apr 2021 13:47

One thing I know has been happening is people getting BBLs and putting the money straight into Premium Bonds. If you look at the amount of winners over the last few months, so many of them mysteriously bought £50,000 of premium bonds in May or June 2020. Far too many to be a coincidence.

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Replying to gigagirl:
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By Paul Crowley
23rd Apr 2021 14:23

Which means they have held onto the money and the money is recoverable
Premium bonds a better way to keep money safe than putting into a bank with limited deposit protection.

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Replying to Paul Crowley:
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By Tax Dragon
23rd Apr 2021 14:36

Indeed. At least they will be able to repay.

This 'idea' does raise certain tax questions, in the context of company BBLs, as I believe premium bonds cannot be taken out by companies. So either there's a loan to the director - BIK - or the director might argue that they are acting as trustee for the company (having first taken advice from Justin that this would not be fraudulent). Of course, this latter means that any winnings also belong to the company. Why then would they not be liable to CT? How then do you extract them without (more) tax?

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Lisa Thomas
By Lisa Thomas
26th Apr 2021 12:32

Hi

Apologies if I am repeating someone's else's response but I don't have the time to read them all.

Directors can try to dissolve the Company but, if they follow the rules correctly, have to give all creditors notice. My understanding is that the Bank will object to this, because they need the Company to enter Liquidation in order to be able to claim the guarantee from the government.

If the government do not change their policy then I expect to see a major shift in the Bank's attitudes and there will be a landslide of banks paying to Liquidate companies in order to be able to go cap in hand to the government.

If the Company is Liquidated, the Liquidator will investigate the directors conduct and if misconduct/fraud has been committed this can have serious repercussions for the Directors. If they haven't committed any misconduct then there is no issue.

In addition the creditors can always reinstate the Company further down the line (next 20 years I believe).

So, in theory your clients may be able to get away with dissolving the Company, rather than Liquidating and they may get away with it but then again there is a risk that they won't and this risk is going to get larger in the months ahead as the bank's begin to call in the BBLs.

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By Chelseabean
28th Jun 2021 20:48

How can you apply to dissolve a company using a DS01 when you have a bank account still open? No bank will allow you to close the bank account without repaying all the bounce back loan. If a director does go for the DS01 route this then he/she/it is breaking the law and will probably be help personally liable for any unpaid debt and the closure would, I expect, come back further down the line and bite them in the rear.

As far as I can see it is not possible to close a company with an outstanding bounce back loan unless there is a voluntary creditors insolvency or if a creditor instigates the insolvency.

From some of the comments here it may be difficult to believe but there are some genuine businesses who took out bounce back loans in good faith but did not know that the lockdown nonsense would still be going on today - 12 months down the line. I know of a few companies that used the BBL money to pay for their fixed costs for a few months until the money ran out. Now, they cannot afford to pay the crazy fees that some insolvency practitioners charge so their companies I expect will simply remain in limbo for many years.

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Replying to Chelseabean:
RLI
By lionofludesch
28th Jun 2021 21:22

No need for the directors to pay. The creditors will decide whether it's worthwhile appointing a liquidator.

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Replying to lionofludesch:
Lisa Thomas
By Lisa Thomas
29th Jun 2021 10:37

Agreed in some cases - as I stated about we are expecting the banks to starting paying to Liquidate so they can recover the BBLs under the government guarantees.

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Replying to Chelseabean:
Lisa Thomas
By Lisa Thomas
29th Jun 2021 10:37

The bank account being open doesn't stop a Director lodging a DS01 and doesn't stop C house from striking a company off, although an objection from the Bank would.

Many insolvent companies file DS01's in order to strike off their companies.

Unfortunately it is not 'breaking the law' if proper procedure is followed before lodging the DS01. Creditors should be given notice and invited to Liquidate the Company.

It is possible for the company to be dissolved (if the bank/HMRC other creditors do not object.) Many slip through the net. Also, if the company does not file is statutory returns, then Companies House will strike it off.

The Insolvency Service is shortly being granted retrospective powers to investigate and pursue directors of dissolved companies, without having to reinstate. This will bring about change but suspect it will be slow and, initially, under resourced but does mean that many directors will be pursued much further down the line for misconduct and DLAs.

If the companies you refer to cannot afford to pay to Liquidate the company voluntary they can do it in the court instead, at a fixed fee, so the IPs fees are irrelevant. Additionally they can try and strike the company off instead. Eventually C House will strike them off at some point if the company is not liquidated.

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