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Q3 insolvency

A total of 3,765 overall insolvencies including liquidations and administrations were recorded over this period - which is 17% higher than in the previous quarter covering April to June and is 43% higher than the same quarter from the previous year. 

Creditors voluntary liquidations (CVLs) was the most common procedure as it featured in 92% of all insolvencies with 3,471 cases. 

This is a rise of 16.7% compared to the previous quarter this year and a rise of 43.5% compared to the same period a year ago. 

4% of the remaining number of cases were administrations, 3% were company liquidations and the remaining 1% were company voluntary arrangements or CVAs.

Administrations and receiverships increased by 26% from the previous quarter and additionally company dissolutions or strike offs increased 52.1% compared to a year ago with 53,325, which was also a rise of 19.9% (25,799) on the same period in 2019 before the pandemic arrived. 

Compulsory or forced liquidations remained at near all-time lows with 172 due to a combination of support measures such as the bounce back loan, CBILS and the furlough scheme as well as restrictions on creditor actions such as being able to bring winding up petitions against debtors.

There was also a reduction in the number of members voluntary liquidations (2,862) and company voluntary administrations (CVAs) with 22 - down from 67 twelve months ago. 

Economic damage now reflected in the figures

Nick Fisher, Deputy Vice President of R3, the insolvency and restructuring trade body, said: “The economic damage caused by the pandemic is now starting to be reflected in the levels of corporate insolvency  - but the picture is mixed when looking at the different types of procedure.

“Corporate insolvencies have risen this quarter to the highest quarterly figure since the pandemic began, and this has been driven by a rise in creditors voluntary liquidations (CVLs) to their highest quarterly total in 12 years. 

“That said, administrations have remained static compared to Q2, while there has been a small drop in the number of CVAs; both of which are much lower compared to the year before.

“The rise in CVLs would suggest that company directors are choosing to close their businesses after trading for more than a year and a half during the pandemic and deeming future success unlikely. 

“This is understandable given the current economic climate. Over the last three months, businesses have faced a perfect storm of rising energy prices, labour market and supply chain issues, coupled with the winding down and withdrawal of the Government’s support measures. 

“In addition to this, consumer spending and confidence declined over the late summer and early autumn as people worried about their finances and the future of the economy, and cut back on their spending as a result.”

Chris Horner, insolvency director with BusinessRescueExpert.co.uk said: “We’ve been expecting to see company insolvencies increase for a little while so it’s no big surprise to see them increase. 

“Contributing factors include the end of the furlough scheme and businesses who deferred HMRC liabilities starting to repay them as well as other borrowing such as CBILS and bounce back loans also coming due. 

“A factor in the increase in creditors voluntary liquidations may be that under specific conditions winding up petitions can be pursued by creditors again so directors might have chosen to take action now rather than await others taking it. 

“We’ve all seen the news about higher inflation, staff shortages, increasing energy prices, possible interest rate rises and the need to repay pandemic incurred debt.  Any combination of which would likely lead to a further increase in insolvencies in the next quarter covering October, November and December this year. 

“Any of these will put additional pressure on businesses over the upcoming Christmas period, especially those in the hospitality, retail and leisure sectors that have already suffered disproportionately over the past 18 months and need a positive response in the next three months. 

“Any business owner or director that’s worrying about whether their company will be able to have a good enough festive sales period to meet their outgoings can use this time constructively. So can those that know they won’t be able to service their debt obligations regardless of their performance over the next three months.”

It will be 2022 in less than two months so time is short.

But there will be enough to help a company turn its fortunes around if those in charge use the time properly and get in touch with us to begin to work on a recovery strategy. 

They can book a free initial consultation with one of our experienced advisors online, by phone or email for a convenient time and day for them. 

Once we have a clearer idea of the situation facing them and their business, we can begin to put together the most appropriate, efficient and effective strategy to fix their problems and make 2022 a real year of recovery and renewal. 

But only if they take the first step of the journey right now and get active in their own rescue. 

The end of the furlough scheme means that employers have to bring staff back into the organisation on full pay and conditions otherwise they will have to consider redundancies. 

The restrictions on winding up petitions are also being lifted but come with a £10,000 price tag initially until March 2022 so this might provide some flexibility from debts but they will just be postponed rather than disappear. 

Our regular monthly round up gathers all the other business and insolvency, administration and CVA news and stories you might have missed this September including news from some big names.


How bounce back loan repayments can affect sole traders and partnerships too 


Cleveland Bridge 
Cleveland Bridge, the storied constructors of the Tyne Bridge and the Sydney Harbour Bridge amongst others closed this month with the loss of 100 jobs after going into administration with debts totalling £21 million.

Despite a search for buyers, the decision was taken with administrators citing a number of factors leading to the company’s final collapse. 

These included an £11 million estimation error on one project, delayed contracts, rise in steel prices, requirement for additional overtime work and a political coup in Sri Lanka where a major project was underway. 

There was also a live case being investigated by the Health & Safety Executive and a live insurance claim.


Derby County

Championship football club Derby County managed by Wayne Rooney went into administration and immediately took a nine point deduction leaving them bottom of the table on minus two points. 

They are also facing additional financial irregularity charges from the Football League which could see another 12 points deducted. 

The club blames a number of factors for their financial predicament including the failure of chairman Mel Morris to sell the club and the continuing impact of the Covid-19 pandemic on revenue streams. 

A spokesperson for the club said: “Last week it became clear that the process which has been under way to identify a purchaser for the club likely would not be productive over the near term, despite negotiations with credible parties.”

The club is already under a transfer embargo so may not be able to bring in any new players when the transfer window reopens in January but could lose some as administrators look to reduce costs.


PFP Energy 
PFP Energy are the latest small energy supplier to go into administration this month as a crisis hits the UK industry with a sharp rise in wholesale gas prices affecting the market detrimentally. 

The company had 50 employees and supplied energy to around 66,000 domestic customers and 25,000 non domestic users. 

They are only the latest company to close their doors in this extraordinary month for energy suppliers. 

They join Avro Energy, Green Energy, HUB Energy, MoneyPlus Energy, Midlothian Energy, Hiber Energy, Utility Point and People’s Energy that have left over a million customers looking for a new supplier.


Plastech Moulding
Norfolk-based Plastech Moulding, who make plastic forks for supermarket snacks are making 15 out of 19 staff redundant after the government announced plans to ban single-use plastic items. 

Managing Director Stephen Rundle confirmed that their main client had informed him that they were replacing plastic forks with wooden ones imported from China. 

He said: “The effect on us is devastating. We have lost 100% of our business overnight and didn’t get any notice. The factory is standing idle and now 15 people are set to lose their jobs.”

Despite the forks being manufactured with biodegradable plastics and claimed to be a less environmentally damaging alternative to importing from China, it was not enough to sway their main client.


EVCL Chill
Warehousing, haulage and distribution company EVCL Chill which supplied Asda and Sainsburys has gone into administration. 

Formerly known as NFT and based in Alfreton, Derbyshire, administrators have indicated that they will immediately begin marketing assets for sale to pay off creditors. 

650 of the firm's 1,000 staff have been transferred to key customers to fulfill orders but the roles of the rest have no immediate guarantees. 

The business was owned by venture fund Emergevest and up to December 2020 had a turnover exceeding £167 million but administrators confirmed that a loss of key customers and acute driver shortages proved pivotal. 

New investment and ownership was sought but with no realistic offers forthcoming the management decided to place the business into administration. 

A spokesperson said: “This has been a very difficult situation for us? and as a business moves from survival mode to recovery, the financial climate is still very volatile. The sector is already facing many difficulties and challenges. We will continue to fully support all affected staff members during this difficult time.”


SprintDeliver
Another Derbyshire based haulage business, Sprintdeliver, went into administration blaming the impact of Covid-19 and the general shortage of HGV drivers in the UK. 

A spokesperson said: “In recent months, the company had encountered significant financial challenges due both to the impact of the Covid-19 pandemic on trading and difficulties in attracting and retaining drivers.

“Haulage companies up and down the country are currently facing significant challenges regarding the acute shortage of drivers which in turn is resulting in increased wage costs and higher staff turnover. 

The business had a fleet of 30 lorries and 30 trailers but as administrators found there was no prospect of resuming trading so the remaining 35 staff were made redundant.


Yolt
Dutch bank ING are closing their consumer-facing smart money app Yolt leaving the future of their 61 UK employees in the balance. 

The bank has decided to concentrate on their open banking services and proprietary technologies and platforms rather than apps. 

Yolt’s chief executive Nicolas Weng Kan said: “We want to give financial control to as many people and businesses as possible, empowering them to make more informed choices to help them achieve better financial health, create opportunities and make it possible to fulfil their potential. 

“Focusing on Yolt Technology Services is a faster and more effective way of driving change. I would like to reassure Yolt customers that any money held in their accounts or personal data is safe and we will be in contact when the decision is final.”

The app currently has 1.6 million users who will be taking a keen interest in what ING decides. 

When Yolt launched in 2016 after the Competition and Market Authority allowed big banks to allow licensed start-ups to access their data which saw a plethora of similar platforms launched.  

Anaylst now point out that five years later there would naturally be some exits from the space as competition from new apps and lenders have invigorated big lenders. The dawn of open banking gave them a wake-up call and many have improved their own apps and money tools in direct response.


Woodlands Leisure Centre
The Woodlands Leisures Centre in Norfolk has closed with 13 jobs lost. 

Billy Wright, the centre’s owner, said: “This has been a very difficult decision to have to make, and not one that we have taken lightly. 

“Our 30-year-old building needs major repairs and the running costs are just so incredibly high. With the additional loss due to Covid, the facility is no longer viable or sustainable. We regret that this means that staff at the centre will be made redundant.”


Quadrant catering
The company that owns the franchise to Marco Pierre White Steakhouse and Hotel Indigo in the prestigious Cube development in Birmingham has gone into administration. 

Quadrant Catering Ltd also owns the franchise to Hotel Indigo in the same building. No other restaurants or hotels are affected by the decision. 

A spokesperson said: “The decision to place the companies into administration was taken following the difficult trading conditions faced over the past year as a direct consequence of the Covid pandemic. For businesses in Birmingham, this was particularly difficult given the fact that the city itself remained in Tier 3 for an extended time period.”

Several other chef-branded restaurants in the city have closed recently including Tom Aiken’s Tom’s Kitchen at The Mailbox and Jamie’s Italian so they will be hoping this administration will be a turning point for the sector.


William Aston Hall

The operator of a popular music and events venue at Glyndwr University, Wrexham has ceased trading and gone into liquidation

VMS Live (Wrexham) Ltd which operated events at the William Aston Hall venue said it had been an incredibly difficult 16 months for the events industry.

Acts due to perform at the venue in the coming months included Jimmy Carr, Jack Dee, Jason Manford, Scouting for Girls and The Charlatans. 

A spokesperson for the University said: “We are deeply saddened that VMS LIve (Wrexham) Ltd have ceased trading as a result of the Covid-19 Pandemic. 

“The company had total responsibility and control over all performances and ticket sales and the University fully appreciates that customers who have purchased tickets for future shows or those that have been postponed will be anxious about this news. 

“We advise those who have purchased tickets to contact their ticket provider directly for any information regarding refunds. Unfortunately, as the landlord for the William Aston Hall, the university does not have access to these agencies and is not in a position to process any refunds as no ticket sales have been transacted through us.”


CS Wind (UK)

A wind tower solutions business based in Argyll, Scotland has filed for administration. 

Founded in 2016, the company was the UK’s only factory producing on and offshore wind tower systems at the time but in recent years has been suffering as market conditions deteriorated resulting in a decline in contracts and revenue. 

As a result, it began a managed wind down during 2020 and was effectively mothballed last Spring during the lockdown period. Despite their best efforts, the company was unable to secure new contracts and all staff have now either left or been made redundant. 

With no prospects of any recovery in the market, directors decided to place the business into administration with administrators looking to market the assets for sale.


Genlec Electrical Contractors

Mechanical and Electrical contractors Genlec based in Lancashire have gone into administration with the loss of 18 positions.

The company worked in a variety of different sectors including retail, logistics and education for Morgan Sindall, its main client. 

The business was experiencing financial difficulties due to Covid-19 which meant it was unable to meet its obligations to creditors. The administrators will now proceed with an orderly wind down of the company.


Dawsons Music
One of Britain’s oldest music retailers, Dawsons, has re-entered administration with the loss of 48 jobs and six locations leaving Chester as the only one remaining open physically to support the online presence.

The business went into administration in May 2020 but was sold to a new company which took on the management of the business.  Sadly they were unable to return the business to profitable trading and administrators were brought in again in September. 

A spokesperson said: “It’s been a really challenging period. The company had continued to experience tough trading conditions, exacerbated by the impact of Covid-19 on high street footfall, even following the easing of lockdown restrictions. 

“Additionally, the company was also experiencing supply issues due to the global shortage of silicon chips and the challenges facing international freight and distribution channels.”

Dawsons Music was first established in 1898 and in addition to music retail, the company’s education division supplies music equipment to schools and colleges across the UK and internationally.


 
Swansea Factories
Two manufacturers with bases in Swansea announced their impending closures this month 

Toyoda Gosei, which supplies body sealing components for major motor manufactures such as Toyota and Aston Martin is closing both its UK plants in Swansea and Rotherham putting 400 jobs in jeopardy.

The company said the decision was in response to continued changes in the global automotive sector, and a significant reduction in key UK customer demand.  

Additionally, 3M will close their plant in the town with the loss of a further 89 positions. 

The plant is the company’s oldest manufacturing facility outside of the USA and they said it is suffering from ongoing underutilisation impacted by changes in the markets it serves - the personal care industry, collision aftermarket and vehicle repair centres.

The closure campaigns for both facilities will begin in 2022. 


This week doesn’t just see the end of September but also the final end of most of the Covid-19 support schemes established with the first lockdowns in 2020. 

The furlough scheme finally closes on September 30th; CBILS and bounce back loan repayments continue to mount up along with increasing defaults and under certain specific conditions, the slight return of winding up petitions too.

Time is running out if your business is struggling to meet payments and obligations now.  

You can still act now and see real change before the end of the year but only if you take the first step and get some professional advice first. 

We offer a free, initial consultation to get a fuller understanding of what issues are the most pressing for your company.  We can then work with you to draw up a timely plan for you to implement to help you prepare your business for the busy Christmas and New Year trading period. 

Alternatively, if there is no realistic way forward for the business then we can advise on the easiest and most effective and efficient way to close and resolve outstanding debts and issues with creditors - this includes outstanding bounce back loans and VAT arrears too. 

Whatever issues you’re facing - don’t face them alone any longer.

September 2021

After an unexpected decline in the number of company insolvencies in the UK in July, the August total rose to levels not seen since before the pandemic according to the latest official monthly company insolvency statistics released by The Insolvency Service

For England and Wales alone, the total number of corporate insolvencies for August 2021 was 1,348 - this was up 251 from the 1,097 recorded in July and is 71% higher than the 788 insolvencies recorded in August a year ago. 

The total is also broadly similar to the pre-pandemic total of 1,366 from August 2019 and represents the fourth consecutive month both of insolvencies numbering over 1000 and being higher than the same month a year previously.   

Of these 1,348 company insolvencies, the vast majority were Creditors Voluntary Liquidations (CVLs) making up 1,256 of the total amount. 

Additionally, there were 35 compulsory liquidations; 55 administrations; 2 company voluntary arrangements (CVAs) and zero receivership appointments. 

Breaking these down further we see:

There were 89 company insolvencies in Scotland last month, up from 72 in July. This was also nearly double the number from a year ago and was 13% higher than in August 2019. 

This comprised 11 compulsory liquidations, 76 creditor voluntary liquidations and two administrations. There were no CVAs or receivership appointments recorded. 

From a historical perspective, compulsory liquidations have been the most common type of insolvency recorded in Scotland but since April 2020 there have been more than twice as many CVLs as compulsory liquidations. This has now been the situation for 15 out of the previous 16 months. 

In Northern Ireland there were 9 company insolvencies registered which although five less than in July it was more than double the number from a year ago although 59% lower than August 2019. 

This was made up of eight CVLs and one compulsory liquidation. 

The overall total of UK company insolvencies for August 2021 is 1,446, which is up 266 from last month.


Colin Haig, President of R3, the insolvency and restructuring trade body said: “The insolvency figures published today highlight how much tougher the climate is for businesses and individuals than this time last year, and the toll the pandemic has taken on business and personal finances over the last 12 months.

“The increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations (CVLs). 

“Numbers for this process were 115% higher than this time last year, and 30% higher than in 2019, which suggests that despite the opening up of the economy, there are a number of company directors who are opting to close their businesses after a year and a half of trading in a pandemic. 

“This comes despite the fact that August was one of the better months for businesses since the start of the pandemic. The lifting of the final restrictions and continued impact of the vaccine rollout means that more people are working, shopping and spending and that looks set to continue as we enter the autumn.

“However, with the furlough scheme closing at the end of this month, company directors need to be aware of the signs of business distress and seek advice if any of them appear. 

“If a firm is having problems paying rent, staff or suppliers, has issues with cash flow, or its directors are concerned about its future, now is the time to seek advice from a qualified professional, rather than waiting until the problem has become worse.”


The numbers couldn’t be any clearer. 

For the fourth month in a row, company insolvencies are higher than they were a year ago and now are nearly back to where they were before the pandemic began. 

This is before the furlough scheme finally winds up at the end of September and winding up petitions can begin for businesses that owe creditors over £10,000 - under this amount continues to be suspended until the end of March 2022. 

As HMRC begins to increase their clawback of outstanding debts including overdue bounce back loans and VAT arrears, the next few months look increasingly tough for businesses already struggling with their finances. 

If there’s a time to look for help and get expert advice on what options are available then it’s now. 

Any business owner or director taking advantage of our free initial consultation might be surprised at how much room to maneuver they actually have, but until they get in touch and let us know their situation - they won’t know for sure.

What we know for sure is that the longer businesses leave it, the less opportunity they will have to act when they really need to.  

 

As home working became the enforced norm for millions, home shopping followed and home deliveries rocketed as a result. 

The haulage industry stepped up to keep supplies running while the warehouses worked with customary efficiency to get packages out as quickly as they were coming in.  

The postal and courier delivery services stepped up and became a nearly daily feature of our lives, accepting packages for neighbours if we weren’t expecting and receiving them ourselves.

It’s difficult to think of any goods transported in the UK that aren’t involved in road transport in some way.  

According to the Road Haulage Association (RHA) some 89% of goods are estimated to be directly moved by road and the 11% that aren’t will still require some road connection in their journeys between ports, airports and rail terminals. 

The sector is the UK’s fifth largest employer and 2.54 million workers alone keep the haulage and logistics businesses operating. 

But cruelly, just as the final government support measures are being withdrawn, transportation businesses are suffering. 

In the latest business insights bulletin from the Office of National Statistics, more transportation and shipping companies are likely to have paused trading or shut down altogether than any other sector with just 82% of them operating as normal. 

The report found that 9.1% of transport and storage firms have permanently ceased trading, while 8.5% are paused.  

The average across the wider UK economy is 3.4% of businesses have closed for good while 7% have closed temporarily.

It found that the high percentage of paused and not permanently ceased traders was partly driven by the freight transport by road industry and the unlicensed carriers industry which is experiencing a shortage of lorry drivers. 

The knock-on effect of these and other issues means the national supply chain is affected with 7% of UK businesses unable to get materials and staff in the last fortnight with others forced to switch suppliers or make alternative arrangements. 

Rod McKenzie of the RHA said that in the short term drivers’ pay is increasing to stimulate demand but: “This in turn is a cost that will need to be passed on, and given the tight profit margins of most haulage operators that means their rates to customers will have to go up.

“In turn, this may mean more of us paying higher prices for goods, services and shopping - including food prices - going forward.”


Who kept the show on the road?

According to the figures from March 2019 to February 2020 - there were 527 insolvencies involving businesses in the transportation sector. 

In the immediate 12 months afterwards from March 2020 when the first nationwide lockdowns were implemented to February 2021, there were 382 closures in the sector. 

Now, according to official statistics supplied by the Insolvency Service, there have been an additional 156 transportation sector insolvencies since March this year which takes the total number since lockdown to 538 - which is 33 a month or over eight a week pulling down their shutters for the final time. 

Ominously, 51 businesses in the sector became insolvent in June this year, the last month figures were available for, the largest monthly total recorded since March 2020.

Did bounce back loans soften the blow?

Many transportation companies took advantage of the support options available to them throughout the pandemic and recovery period. 

Many furloughed staff rather than making them redundant and others looked for government-backed borrowing sources such as bounce back loans or CBILS to help them through this unprecedented period. 

The number of bounce back loans taken out by UK transportation services was 77,920 with a total amount borrowed of £2 billion.

This is an average loan amount of £25,667 per company.  

Under the most conservative official estimates, it’s expected that 15% of the total lent to the industry would remain uncollected would be £300 million but if the default rate rose to even 40% then this figure would also grow to £1.2 billion. 


Companies with bounce back loan arrears can still close - find out how


Now the end of the line for the furlough scheme is in sight and while the temporary suspension on winding up petitions is being lifted to an extent, it will come with a £10,000 price tag until the end of March 2022 meaning some, but not all, creditors will stay their immediate legal attempts to force repayment. 

Of course this doesn’t apply to any bounce back loan arrears or other borrowing amounts which have yet to be repaid. Nor will it impact on owed VAT arrears or stop business rates being reapplied to companies with physical properties. 

Chris Horner, Insolvency Director with BusinessRescueExpert.co.uk thinks transportation businesses have a bumpy road to travel in the near future. He said: “Despite performing heroically during the pandemic and lockdown, the sector has been hit with a triple blow almost instantaneously. 

“An unlucky combination of Covid-19, Brexit red tape and personnel shortages means a lot of businesses in the sector are facing dire financial conditions just when they should be gearing up for the busy Christmas and new year period.

“Unfortunately the timing of these issues are hurting a lot of otherwise viable transportation firms. Bounce back loan and VAT arrears are building and the lenders will be taking more active steps to recover this debt.

“One thing transport and logistics businesses can do is move quickly when they need to and if they can arrange some professional advice and act on it, they might still be able to make the necessary changes and protection to get back to doing what they do best and keeping the country literally on the road to recovery.”


Any business owner or director of a transportation focused business will tell you that logistics only works when there are no blockages in the system. 

One hold-up can affect the whole network, impeding every channel until the problem is solved or removed. 

But once it’s cleared, the recovery is usually quick and normal productivity and services are functioning again swiftly.

So it is with business rescue and restructuring. Once the biggest problems are identified and solved, upward progress usually follows in short order. But only when they’re dealt with. 

We offer a free initial consultation to directors and business owners to identify what problems are holding their companies back and we’ll work with them quickly and efficiently to diagnose the most effective solutions. 

The remedies can often be put into practice immediately but they can only work if the management seizes the chance to take action before it’s finally too late to change. 

Everybody who does paid work considers themselves a professional to some extent - whether it’s building homes, serving food or writing blogs so what makes “professional services” different and special? 

The official title of the standard industrial classification (SIC) grouping is for professional, scientific and technical activities which specifies the activities of these businesses a little more clearly. 

The sector includes sole traders, partnerships and limited liability companies that work in fields such as legal, accountancy, architecture, scientific research, advertising, management consultants and even veterinary services are included.

While the nature of their businesses might vary greatly, they will all have faced similar challenges to overcome in the previous 18 months. 

So how are professional services faring in the post covid economy?

While the construction, hospitality and retail industries took a lot of oxygen and headlines about how the pandemic was affecting them - professional services businesses were also fighting their own battles to stay afloat too. 

Since the first UK-wide lockdowns and enforced trading suspensions were implemented in March 2020, 1,351 professional services businesses have become insolvent (537 in 2021 alone) - which is more than 25 every week.  

To put this in context, that’s nearly as many as the hospitality (1,378) and retail (1,355) industries without any of the associated attention of publicity.

One reason why is because the nature of the businesses are so disparate, it’s hard for the sector to speak with a unified voice. 

Takeaways and fine dining restaurants have a lot of differences and cater for different clientele and markets but their interests can be effectively lobbied for by the same influential groups such as UKHospitality.  

A marketing agency and a vets surgery will have their own representation but are unable to combine their funding, focus and forces to raise as formidable defence as the retail and hospitality sectors defenders did. 

One area where professional service providers were able to compete on an equal footing with other sectors was when it came to accessing coronavirus support measures such as bounce back loans and being able to avoid making staff redundant by furloughing them instead as part of the coronavirus job retention scheme (CJRS). 

When it came to bounce back loan borrowing, the professional services sector took out the third highest number of loans - nearly 160,000 - and after the retail and construction sectors, collectively borrowed the third highest total of £4.5 billion in support finance. 

This works out at an average of £28,252 for every professional services business who was approved to access a bounce back loan. 

Our research showed that under the various repayment scenarios it’s estimated that between £675 million and £2.7 billion might remain unpaid from this amount depending on the various circumstances facing the borrowers.  


You can still close your professional services company even if it has bounce back loan arrears


Now as accountants, business coaches and PR professionals begin to make up for lost time and hope to recover the ground lost during the previous 18 months, another potential problem looms on the horizon

The end of September sees a confluence of rule changes coming together to spell trouble for unprepared professional service business owners and directors: 

Employers with staff on furlough have already begun paying a greater contribution to their wages in August and September already but the entire scheme is ending on September 30th leaving businesses with potential tough decisions to make regarding staffing, rehiring and potential redundancies.

Bounce back loan and CBILS repayments will already have begun for the majority of borrowers but those that obtained a six month delay to the repayments will see it end this month meaning that these debts will now come due. Additionally any VAT arrears incurred in 2020 are also due now.

Creditors have legally been restrained from seeking redress for owed debts since March 2020 meaning that statutory demands and winding up petitions for debts incurred during and as a result of the pandemic have been unable to be granted or enforced. 
This ends on September 30th as does the suspension on termination clauses, which guarantee supplies to businesses and stop suppliers from asking for additional security or extra payments from businesses that enter administration or other restructuring procedures. 


Chris Horner, Insolvency Director with BusinessRescueExpert.co.uk thinks that professional service businesses such as marketing firms and architectural practices have a significant advantage that other sectors lack. 

He said: “The entrepreneurial nature of the sector - whether it’s a design studio or established partnership - means that these businesses tend to be more agile than companies in other industries. 

“This means that they can make decisions quicker and more importantly implement them to take advantage of changing circumstances that could affect them significantly. 

“The various changes coming in at the end of the month will have serious repercussions for a lot of companies that don’t realise what’s about to happen or are unable to get impartial and professional advice to make the necessary choices and changes required. 

“It’s the latter that will be best able to adapt to a potentially unfavourable outlook and protect their employees’ livelihoods as well as themselves.  


One of the sad ironies that most professional service businesses understand is that when times get tough for their clients, they tend to be seen as some of the first expenditure that should be cut while they tighten their belts. 

This often proves counterproductive because it’s the expertise and knowledge that they were hired for that would give the client a significant edge over competitors who would also look to cut back and grant them a competitive advantage at the very moment it’s most needed. 

Every business in the professional services sector will have stories about clients acting in haste and repenting at leisure - so they should be able to take their own advice and act quickly and decisively when the circumstances demand action. 

A business with bounce back loan and VAT arrears, CBILS or other borrowing might be able to sustain them today but this situation will change in less than four weeks. 

That’s why we offer a free, initial consultation to any business owner or director who wants advice on how they can best protect their business.

We will listen and learn what challenges they’re facing and be able to provide options they can deploy, some immediately, that will either buy them valuable time to act or allow them to efficiently and properly begin to close an unviable business - even one with bounce back loans or other unmanageable debts.  

construction

Stress might be one of the most misapplied words in common usage. 

Any good construction professional will be able to explain that stress is a temporary force acting on structure while strain is a permanent change - either in shape or size - directly resulting from the pressure of that stress. 

A little stress can be a good thing as it can prove that a design or structure is working as it’s meant to. It’s when it becomes a strain that more serious issues can occur. 

So has the previous 18 months caused the construction industry severe stress or has it turned into a permanent strain on the sector?


Year of Lockdowns

No UK industry was more badly affected by the pandemic than the construction industry. 

From March 2020 when the first lockdowns were instituted to the end of March 2021 more than 1,600 building firms closed down permanently. 

This is higher than both the hospitality and retail - two sectors previously thought to have fared the worst since the pandemic began. 

1,634 firms in construction went under during this period compared to 1,378 in hospitality and 1,355 in retail. 

In our Year of Lockdowns report, we broke down how the pandemic had affected every aspect of life across the country for businesses, their owners and staff. 

We found that the halting of various large and small scale building projects had badly damaged all elements of the construction industry. 

According to official Insolvency Service statistics, there have been an additional 596 construction insolvencies since March taking the total number since lockdown to 2,230 or 34 a week.

In this month alone, Darlington based Cleveland Bridge and All Foundations, one of the country’s top piling contractors, entered administration while Mansfield based Minister and AM Griffiths from Wolverhampton ceased trading altogether and went into liquidation. 

Sadly, they will be joined by other notable names this year.


Loans granted but will construction bounce back?

The various government support schemes greatly benefited construction during the past 18 months. 

The coronavirus jobs retention scheme, better known as furlough, allowed them to retain some of their most valuable staff while sites and projects shut down and borrowing such as CBILS and bounce back loans allowed them to quickly access funds to support themselves. 

Especially bounce back loans. 

The construction industry collectively accessed the most bounce back loans of any sector with nearly a quarter of a million bounce back loans granted - 238,825.

The total amount borrowed was £7 billion, second only to the retail industry, which is an average borrowing total of £29,310 per company.  

Under the most conservative official estimates, it’s expected that 15% of the total lent to the industry would remain uncollected which is a not inconsiderable £1.05 billion. 

This doesn’t just affect large contractors and builders but many sole traders and partnerships too, which make up a large proportion of the industry.


You can still close your company even if you have bounce back loan arrears - find out how


Next month sees a further bottleneck of trouble brewing for already struggling builders. 

The coronavirus job retention scheme better known as furlough is finally wound up meaning businesses will either have to decide to welcome workers back on full wages with no government support or consider redundancies. 

Bounce back loan and CBILS payment arrears will continue to be demanded along with any unpaid VAT arrears from 2020.  

Also certain creditors actions are set to resume on September 30th allowing creditors to seek statutory demands and winding up petitions for unpaid debts and a further small but critically important protection for constructors is also being removed. 

Termination clauses were suspended which stopped suppliers from ceasing their supply or asking for any additional payments or security from businesses that are undergoing a restructuring or administration process. 

From the end of next month they will be able to once again, which will place further strain on otherwise viable but struggling companies and potentially lead to more disorganised and chaotic collapses rather than professionally managed recovery strategies and business rescue plans. 

Chris Horner, Insolvency Director with BusinessRescueExpert.co.uk spotted this specific danger last month when he said: “Construction companies that rely on the guaranteed availability of materials could quickly find themselves in difficulty if suppliers start to use these newly restored rights, right away.

“Due to the actions of a supplier, otherwise profitable businesses could find themselves trading while insolvent through no fault of their own. 

“If a builder, civil engineering practice or other vital part of the construction industry that underpins so much of the country’s infrastructure is now worried about what these changes will mean, we can help reassure them.

“There is a small window of opportunity for them to act - right now - before September 30th.

“We can help them formulate a recovery strategy for their business that will protect them into the Autumn months and beyond. 

“This includes if they have bounce back loan arrears, CBILS debt, VAT arrears or other unsustainable debts that have built up over the previous 18 months.” 


Construction businesses naturally have a genius for delegation. 

Not just using the right tool for the job but the right subcontractors, the right workers and the right people in the right places at the right time. 

We employ the same principle for businesses facing financial difficulties. 

Speak to an expert who can give you a quote and let you know exactly what they would do, when, how, why and then deliver on their promises.

The sooner a business owner or director gets in touch to arrange a free initial consultation, the earlier we can let them know what options they have and the quicker they can be implemented. 

Rules, regulations and trading conditions will change next month along with the seasons so act today so you won’t be caught out tomorrow. 

July stats 2021

This is because they’re more susceptible to immediate fluctuations rather than gradual trends. 

The number of company insolvencies declining across the UK in July after rising for two consecutive months was still a slight surprise in the latest official monthly company insolvency statistics released by The Insolvency Service

For England and Wales, the total number of corporate insolvencies for last month was 1,094 - this was down 112 (9.3%) from the 1,207 recorded in June’s total but still 13.4% higher than the 741 recorded in July 2020. 

While both totals are still below the 1,442 recorded in July 2019, a 24% reduction for 2021, it is the third consecutive month that year-on-year figures are higher than 12 months ago - indicating a broader recovery towards pre-pandemic levels.

112 cases is a relatively small number and combined with the residual effect of the summer holiday season and the general upward trend of cases we should expect this to begin to rise by October at the latest.

The reduction in monthly cases is the first since April and with creditor actions such as statutory demands and winding up petitions due to be reintroduced at the end of September along with the widely expected withdrawal of the furlough scheme and other support measures, it’s logical to speculate that insolvency rates will be a lot higher by the end of the year.

Of the 1,094 company insolvencies recorded in July in England and Wales there were 1,007 creditors voluntary liquidations (CVLs); 41 compulsory liquidations; 40 administrations and 6 company voluntary arrangements (CVAs). Once again, there were no receivership appointments in July. 

Compulsory liquidations and administrations saw small rises from June - up three and one respectively, while there were 109 fewer CVLs and eight fewer CVAs. 

The only category that isn’t lower than its 2019 equivalent are CVLs which are at the same level. 

Additionally:- 

There were 72 company insolvencies in Scotland last month comprising 14 compulsory liquidations; 54 CVLs and four administrations. Overall these figures were 36% higher than a year ago but 26% lower than in 2019. 

Historically, compulsory liquidations have been the most common kind of insolvency registered in Scotland but since April 2020 there have been twice as many CVLs as compulsory liquidations. This has been the situation for 14 out of the preceding 15 months.

There were also 14 company insolvencies registered in Northern Ireland - 40% higher than in July 2020 but 33% lower than for July 2019. 

This was made up of one compulsory liquidation, nine CVLs and an administration. 

The overall total of UK company insolvencies for July 2021 is 1,180, an overall decrease of 115 from last month’s collective total. 


“It will take longer for the worst hit sectors to recover from the pandemic”

Colin Haig, President of R3, the insolvency and restructuring trade body said: “The month on month fall in corporate insolvencies was as a result of a drop in compulsory liquidations, CVLs and CVAs. 

“However, this is the third consecutive month in which year-on-year corporate insolvency levels have risen, which reflects the effect the pandemic has had on the business community. 

“The 70.4% increase in CVLs this month compared to July 2020 suggests an increasing number of directors have decided to close their business after spending a year trying to survive the pandemic. 

“Although government support has continued to provide a lifeline for many businesses which would otherwise have struggled in an economic climate like this, this July was still a challenging month. 

“The delay in lifting the final restrictions will have hit trading, footfall and spending, and a huge number of firms have spent 15 months trading in conditions that are wildly different to normal. 

“With the opening up of the economy, consumer confidence at pre-pandemic levels, and spending levels higher than they were in 2019 the future does look more optimistic. Having said that, it will take longer for the worst hit sectors to recover from the pandemic. 

“SMEs are the backbone of the UK economy, but many have been badly affected by the pandemic. The restructuring community is better placed than ever to help them and other organisations with financial worries, but if directors leave it too late to ask for help, they will have fewer rescue or recovery options open to them.”


We couldn’t agree more. 

One of the main advantages of getting in touch with us and arranging a free initial consultation is the earlier a director or business owner does it, the more options they will have available for their company.

Depending on their goals and ambitions for the business, either restructuring the business and its debts are appropriate or if there is no viable way forward in the immediate future then there are several efficient ways to close the business down instead.

No matter what direction you want to go in, there will be an insolvency procedure to achieve it but only if you get in touch. 

Creditors will be allowed to begin recovery actions in only a few weeks so you can be sure they will be keen to exercise their options as soon as they can. 

Make sure you use this time to exercise yours. 

 

After the most difficult 18 months imaginable, most are able to finally reopen. 

Even with some restrictions remaining in place, this is the moment many restaurants, bars, nightclubs, takeaways and other hospitality venues have been looking forward to. 

But look a little closer and each one has further difficulties of their own to overcome. 

According to the latest figures released from the Office for National Statistics, job vacancies passed 1 million for the first time on record and the unemployment rate has dropped to 4.7%.

So why are many hospitality businesses struggling to recruit or retain returning staff? 

The furlough scheme is still in operation until the end of September but the proportion of the working population out of work remains higher than before the pandemic. 

Industry sources indicate that a gap of approximately 180,000 has grown between available positions and potential recruits available to fill them. 

Various reasons have been posited for this gap including former employees finding work in other industries during enforced business closures, better pay, working hours and work/life balance elsewhere, Brexit and the potential uncertainty of businesses continuing to remain open. 

Many restaurants and bars were caught out in the “reopen then close” loop before. 

Hospitality recruiters are now looking at offering higher pay and benefits as UK wages have risen by nearly 7.4% which is causing more headaches for desperate employers tempted or forced to offer unsustainable packages to entice badly needed staff to join and meet an expected high demand from customers who are either staying in the UK for their holidays or are eager to eat out once again after lockdown. 

The worry for some directors and hospitality business owners is that any rise in demand is temporary and they will be in the impossible position of paying higher wages and costs with reduced demand just when furlough and other government support measures and restrictions on creditor actions are withdrawn in just six weeks time, 


Six weeks to save your business? Why the end of September is bringing big changes you need to know about.


Nightclubs and other parts of the night time economy have also found reopening a struggle. 

The much heralded “freedom day” was disappointing for most as a mix of low consumer confidence, confusing messaging and staffing issues means many are still some way off operating at even 50% capacity. 

They are also operating under a forthcoming requirement for vaccine passports which the government still plans to make mandatory for entry into large-scale venues from the end of September. 

Will Power, owner and operator of the Lab 11 club in Birmingham said it was “complete madness” to limit nightclub entry only to those who’ve been double jabbed. 

He said: “It’s great to be back but we saw a pretty large number of no-shows on our opening weekend.

The venue sold 1,400 tickets for its welcome back night but only 450 attended. A second event saw 850 attendees against 1,500 advance tickets sold and they have had to refund as much as 40% of ticket sales for some events. 

While they haven’t had to cancel any events, Power said the venue was in a “vicious cycle.”

“Every time we’ve had to reschedule events due to restrictions it lowers consumer confidence in purchasing advance tickets for future events.”

Michael Kill, chief executive of the Night Time Industries Association (NTIA), said: “These are businesses that have just spent months - some have been waiting for this moment ever since they shut down in March 2020 - preparing to reopen. 

“Then, on the much-vaunted day of reopening, they are told, ‘Actually, you are going to have to completely change key features of how you operate within months’. It just isn’t fair and it isn’t right to treat businesses this way.”

Even surviving so far should be a reason to celebrate for a lot of nightclubs. 

A study from UKHospitality showed that nearly a third of clubs had closed for good during the past six years alone. 

491 clubs from all over the UK, some 29% of the sector, have shut their doors since 2015 going from 1,694 in 2015 to 1,203 in February this year. 

The ones that reopen might also be facing a hiring crisis of their own as licensed door and security staff numbers are falling too. 

Door Staff require an up-to-date SIA (Security Industry Authority) licence to operate although applications received in the last 12 months are reported to have significantly reduced. 

Following the pandemic and subsequent lockdowns approx. 51% of nightclub staff including security personnel have been made redundant; the majority of whom would have been employed under zero-hours terms which would have made them ineligible for furlough under the coronavirus jobs retention scheme. 

Many will have found new employment leaving a recruitment gap similar to the one facing the other hospitality sectors.

It’s not just employees in the hospitality sector that have been considering their futures during the previous year and a half. 

Many business owners and directors will be looking at their business plans and financial projections and facing some hard choices about what to do in the short and medium term. 

The mountain of obstacles facing them might just be insurmountable right now but that doesn’t mean they can’t try again when conditions are more favourable for success. 

We offer a free initial consultation to any business owner or director to discuss the most efficient and cost effective ways of closing their business and managing any debts including bounce back loans or other arrears. 

Depending on their individual circumstances, they could look to restructure their financial affairs and keep the company going or they could liquidate the old business and ultimately relaunch a new venture within weeks, hopefully without covid restrictions and just in time for a busy Christmas and New Year season. 

Business Rates

The review is still accepting evidence submissions until August 24th 2021 so business owners and directors are still able to register their views and opinions until then by completing an online survey. 

Business rates had been held in abeyance since March 2020 when the government introduced a business rates holiday for retail, hospitality and leisure businesses for the whole of the 2020/2021 tax year.
 
This was due to end on March 30 2021 but was extended until June 30th 2021 and that the business rates multiplier would be frozen for the whole of the 2021/2022 tax year as well. 

Business rates are now live again although relief continues at a rate of 66% until March 31st 2022. 

It will be capped at £2 million per business for properties that were legally required to be closed on January 5th 2021 or at £105,000 per business for other eligible properties.  

There was also a one-off top-up grant available of £9,000 per property and a £594 million discretionary fund made available to support businesses that weren’t eligible for the grants but were affected by Covid-19 restrictions. 


Find out why you may only have six weeks to save your business this summer


This is against the background of continuing chaos for high street retailers. 

Helen Dickinson OBE, Chief Executive of the British Retail Consortium said: “The retail vacancy rate is continuing to rise. 

“Many shops and local communities have been battered by the pandemic, with many high streets in need of further investment. Unfortunately, the current broken business rates system continues to hold back retailers, hindering vital investment into retail innovation and the blended physical-digital offering. 

“The Government must ensure the upcoming business rates review permanently reduces the cost burden to sustainable levels. Retailers want to play their part in building back a better future for local communities, and the government must give them tools to do so.”

Doug Putman, owner of the HMV chain said that the government urgently needed to fix business rates which can take years to adjust to reflect the actual levels of rent paid. 

This results in many retailers paying higher business rates despite rents falling as internet competition increases. 

To add insult to injury, online retailers pay lower business rates because they operate from fewer properties and can base their warehouses in cheaper business rates locations. 

Putman said: “If the government doesn't fix the rates, high streets are going to see a lot more vacancies. 

“Business rates just don’t make much sense. You can pay zero rent and still not make a profit on a store as rates are too high.”

The business rates review has been promised for some time. 

The system provides approximately £32 billion to local authorities but one of the main criticisms is it’s trying to raise too much money from too few property occupiers. 

Physical retailers pay between a quarter and a third of this amount but, while a critical component, retail adds less than 10% to the national GDP - and this was before Covid-19.

Additionally the annual business rates multiplier, currently set at 51p in the pound, is effectively a 50% tax increase baked in which will further burden businesses struggling to break even or make a profit. 

Most citizens and businesses accept that the system plays an important role in generating funds in a manageable way and is difficult to evade as it’s physical and property based but every system can be improved. 

As well as general wishes such as lowered rates and a reduction in the multiplier, what else could we expect to see when the review is announced later this year? 

Among the more popular suggestions for changes include:- 

The idea of business rates supporting local services might also be one that is fundamentally examined in future. 

The Local Government Association (LGA) has warned the government that any changes to the business rates systems has to recognise the importance of this income stream for funding local key services and look to increase funding sources as confidence in the current system dwindles. 


Bounce back loan debt - can you still be pursued after you close your business?


Usually business rate arrears can be a serious problem for businesses as the creditor in this case is their own local council. 

They would usually send a reminder letter followed by a summons and look to be granted a liability order which would give the council additional powers to enforce the debt including the use of bailiffs and ultimately insolvency proceedings to close a business down.

Now business rates are eligible to be paid again, albeit with a high relief level, it could quickly turn into a serious headache for business owners and directors who’re already having to work out how they can make bounce back loan repayments, rent, VAT and increased contributions to any staff remaining on furlough with potentially permanently reduced income streams. 

If you think your company might have to choose which bills to pay and which to let go into arrears then get in touch with us first.

We’ll quickly arrange a free, initial consultation where we can get a broader understanding of your situation and what your near and medium term prospects look like. 

Working closely with you, we can then provide a series of options to help protect the business and better manage your debt obligations or create an orderly path to closure which would also take care of any bounce back loan or business rates arrears that have or will build up in the meantime. 

Whichever approach is best for you and your business, we’ll be able to help you manage it efficiently, effectively and as stress free as possible. 

HMRC

 

The bounce back loan scheme was a success for many of the businesses who used it to help them to keep trading or to support themselves and their employees whilst lock down was in effect. 

The final official borrowing figures released by the government showed that over 1.5 million bounce back loans had been granted for a total of £47 billion - all guaranteed by the government. 

Earlier this year, BusinessRescueExpert.co.uk conducted an investigation into the risk of defaults around bounce back loan borrowing and found that even the official best-case scenario would see nearly 230,000 loans remaining unpaid for a total of £6.9 billion - or the equivalent of building six new stadiums the size of Wembley.

At around the same time the Department of Business, Energy and Industrial Strategy (BEIS) that they would begin to enforce bounce back loan debt recovery imminently but carefully. 

Business Secretary Kwasi Kwarteng wrote that: “HMRC would adopt a cautious approach to enforcement of debt owed to government that will have accrued” and that HMRC would soon update its enforcement methods so that any outstanding debt could be brought into managed arrangements for businesses affected by the pandemic and subsequent lockdowns. 

Specifically he said that using insolvency to enforce payment would remain a last resort and that he recognised that “the path back to full trading will be difficult for many companies, particularly those with accrued debt and low cash reserves.”

If BEIS are playing the good cop in this scenario then the Insolvency Service are playing the bad cop - promoting their recent successful attempts to wind up several limited companies that had been involved in fraudulent activity including dishonestly obtaining bounce back loans.

Dave Elliott, Chief Investigator at the Insolvency Service said: “The bounce back loan scheme was made available to help support businesses during the pandemic. 

“It’s outrageous that some directors have been trying to abuse this support, and the action we have taken shows we take this issue extremely seriously.”

Despite the tough talk, just how seriously are the authorities cracking down on bad bounce back loan behaviour by directors and business owners?


One growing trend we’ve noticed recently is where companies with outstanding bounce back loan arrears are attempting to dissolve their businesses, or have them struck off. 

Company dissolution is a perfectly legal method of closing a company but comes with a set of strict conditions. It is not an available tool if the company owes any money, including tax or a bounce back loan. New legislation, specifically aimed at unscrupulous directors, is due to become law this year (but will apply retrospectively) and will be a big problem for those  who’ve tried to close their company this way and avoid their legal responsibilities. 

The Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill will allow the Insolvency Service to specifically target and pursue directors who close their companies by dissolving their businesses when they have outstanding debts.

One of the main new measures will see the Insolvency Service given retrospective powers to investigate directors of struck off companies and how they acted in the circumstances leading up to the dissolution. 

Being retrospective, directors of businesses dissolved not only in 2021 but within the past couple of years can expect to be contacted in the near future if they had bounce back loans or tax debt.. 

Directors of businesses with outstanding bounce back loan debts trying to dissolve their business from now on can reasonably expect to receive an “Objection to Company Strike Off Notice”.

This prevents the company from being struck off and will also be an invitation for any of their other creditors to register their objections to the striking off as well. 


Disqualification and fines

No system is 100% perfect so occasionally a business with outstanding debts slips through the net and is struck off.

What are the likely consequences facing directors who have managed to get their businesses struck off with bounce back loan arrears? 

In the first instance the Insolvency Service will be looking to disqualify any directors of companies who have allowed their business to be struck off when it has debt. The disqualifications will be for up to 15 years depending on the circumstances. The directors will also be personally liable for fines and any costs incurred. 

State of play

So now you’ve got a better idea of what could happen - we thought we’d go one step further and find out what’s actually going on with dissolution objections right now. 

Businessrescueexpert.co.uk lodged an FOI inquiry with BEIS earlier this month to ask if they are now filing objections with Companies House against companies with outstanding bounce back loans that are looking to be struck off. 

We also asked on what legal basis these objections were being lodged under. 

BEIS confirmed that it is filing objections where “a strike off notice has been issued against a company which has an outstanding bounce back loan”. 

The legal authority allowing them to do so is contained within the Companies House strike off, dissolution and restoration guidance updated in March 2021. 

Liquidation - a proper alternative

Now we have official confirmation that dissolutions are being officially objected to - with the consequences we’ve outlined - what can worried directors do?

Bounce back loan repayments are falling due, and the last support measures and protections against creditor actions are being removed within weeks

All of this adds increased pressure to cash flows that are already squeezed to the limit as they try to manage all the outgoings with reduced income - if they’re able to trade without restriction once again.

If a business is genuinely unable to meet all of its obligations and liabilities including bounce back loan arrears then there is still one legal insolvency process they can follow that would allow them to close their company, settle their debts and move on to the next chapter of their career efficiently and effectively. 

Company liquidation, or specifically a creditors voluntary liquidation (CVL), is the best route for a business with outstanding debts including unpaid bounce back loans, to follow. 

Once they’ve engaged a licensed insolvency practitioner, they will immediately take over all dealings with creditors and work through the rest of a businesses debts to compile a full picture of who is owed and how much. 

Chris Horner, insolvency director with Businessrescueexpert.co.uk, said: “Our FOI inquiry has proven that HMRC are treating improperly dissolved and dissolving companies as their highest priority, which should effectively close off this avenue for directors looking to close down their businesses. 

“We can expect to see more compensation orders being used to make directors personally liable for the debts of their struck off businesses if the Insolvency Service believe they’ve been done incorrectly or to evade oversight.

“Another common misunderstanding about bounce back loans is that because they are underpinned by government guarantee, they won’t be chased by lenders. They will. 

“The lender will try to secure repayment for at least 12 months as standard as a condition of reimbursement because they will have to show the government they tried to recover the funds they lent. 

“They probably won’t start insolvency proceedings just for bounce back loan debt but when restrictions are lifted at the end of September they could use debt collectors and bailiffs to enforce repayment. 

“If a business chooses to liquidate instead then the bounce back loan will be treated as any other unsecured debt and if the directors have fulfilled their duties to the best of their abilities, then the lender will ultimately be repaid by the government.

“The most important thing any business having difficulties repaying any debts, including bounce back loans, can do right now is to get professional insolvency advice

“The rules literally change at the end of September so if they use this time constructively to protect themselves and their business financially and legally, they could already have moved onto their next venture by the time this happens.”

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association

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