A Bounce Back Loan Story
22/10/2020 | Company Voluntary Liquidation
By Tim Corfield
“I want you to liquidate my company. How much will you charge?”
“Its not quite as simple as that. I really need to know the financial position of the company before I could give any sort of indication of fees – can I ask you a few questions?”
After repeating and explaining myself I managed to find out that the company had around £20,000 value of vehicles (no finance), £5,000 in the bank and the only creditor being a bounce back loan of £30,000. The company was engaged in small building works and not incurring losses.
“What did you use the bounce back loan for?” I enquired.
“I bought a property at auction which I’ve added to my portfolio of rental properties.”
“So, actually, you owe the company £30,000 as a director’s loan account. If the company went into liquidation, I would have to recover this amount from you. Do you understand? I really don’t think a liquidation procedure is appropriate to deal with your company”.
“My friend said this was the way to walk away from a bounce back loan. I’ll call you back”.
Yes, that’s really the way the conversation went. I suspect I’ll be getting a few more like it.
We’re always pleased to discuss with directors the financial position of their company and help them through a difficult period, whether a formal insolvency procedure is appropriate or not – if often helps to talk to an impartial professional.
If you have a client who has financial difficulties please don’t hesitate to call me for a realistic assessment. I’m around any time – 077869 65009.