Bounce Back Loan Liquidation Checklist: A Practical Guide for Directors

✅ Bounce Back Loan Liquidation Checklist: A Practical Guide for Directors

If your business is struggling with an outstanding Bounce Back Loan (BBL) and you’re considering closing down, it’s important to take the right steps to ensure everything is handled legally and with minimal stress. This checklist will guide you through the liquidation process, so you can get your business closure right, while protecting yourself from unnecessary risks.

1️⃣ Understand Your Company’s Financial Health

Before you do anything, take a moment to assess the financial situation of your business. Is it clear that your company can no longer meet its financial obligations, including the Bounce Back Loan?

• ✅ Can the company pay its debts when they’re due?

• ✅ Has the business been struggling for some time and recovery seems unlikely?

If you answered “yes,” then it’s likely time to consider CVL (Creditors’ Voluntary Liquidation). This process is designed for businesses that are insolvent and unable to pay their debts, including BBLs.

2️⃣ Ensure You’ve Used the Loan Properly

Misuse of Bounce Back Loan funds could lead to severe penalties, including personal liability and director disqualification. You must ensure that:

• ✅ Used the loan only for business-related purposes – such as covering expenses or purchasing assets.

• ❌ Didn’t use the funds for personal gain or pay off personal debts.

• ✅ Didn’t continue trading while insolvent, which can worsen the situation.

If you’re in doubt about how the funds were used, it’s a good idea to speak to an Insolvency Practitioner (IP) to ensure you’re on the right track. That is exactly what we do at Anderson Brookes! Contact us today:

Free Consultation – advice@andersonbrookes.co.uk or call on 0800 1804 933 our freephone number (including from mobiles).

3️⃣ Start the CVL Process with Professional Help

Once you’ve assessed your business and made sure the loan was used correctly, it’s time to start the liquidation process. Here’s what you’ll need to do:

• ✅ Get advice from a licensed Insolvency Practitioner (IP) – The IP will help you understand if liquidation is the right option and initiate the process.

• ✅ Gather all financial documents – This includes the Bounce Back Loan paperwork and evidence of how the loan was used.

• ✅ Get shareholder agreement – For CVL, the company’s shareholders need to agree to the process, which kicks off the formal liquidation steps.

Voluntary Liquidation Process Example – BBL – 7 Steps

4️⃣ Let the Liquidation Process Begin

Once the CVL process has started, the IP will handle everything from here. This will include:

• ✅ Taking control of the company’s assets – The IP will assess the assets of the company, sell them if necessary, and distribute the proceeds to creditors.

• ✅ Paying creditors in order – Secured creditors, such as banks, are paid first, followed by unsecured creditors like suppliers, landlords, and the BBL lender.

• ✅ Notifying HMRC and other authorities – The IP will take care of the official notifications to relevant authorities, including Companies House.

Once everything’s sorted, any remaining BBL debt will likely be written off. But that’s only the case if the loan was used appropriately and everything was done by the book.

If you also have HMRC debt, like outstanding VAT or other tax liabilities, make sure to address those during the liquidation process as well. For guidance on dealing with HMRC debt, check out our guide to HMRC debt management.

5️⃣ Protect Your Personal Interests

While the government’s Bounce Back Loan scheme doesn’t require a personal guarantee, it’s still important to ensure that you’re protecting yourself during the liquidation process. Here’s how you can do that:

• ✅ Avoid personal liability – If you’ve used the loan properly and have followed the process correctly, you shouldn’t be personally liable for the debt.

• ✅ Be cautious about misuse – If you misused the loan, you could face personal liability, be disqualified as a director, or even face criminal charges.

• ✅ Stay transparent – Cooperate fully with the IP during the liquidation, making sure everything is above board.

If you’re also struggling with VAT debt or cannot pay your VAT bill, it’s crucial to understand your options. Take a look at our guide on what to do if you can’t pay your VAT bill for practical advice.

6️⃣ Understand the Potential Alternatives to Liquidation

Liquidation might not always be the only option. If your business is struggling but you think it might be salvageable, here are some alternatives:

• ✅ Company Voluntary Arrangement (CVA) – If the company can still trade, a CVA might allow you to repay your debts over time while keeping the business afloat.

• ✅ Pay As You Grow – The government’s scheme lets you extend your BBL repayment term or take temporary payment breaks if cash flow is tight.

But if your company is truly insolvent and cannot repay its debts, CVL is usually the most straightforward and legally safe way to go.

7️⃣ Don’t Forget Post-Liquidation Support

After the liquidation is complete, there are still things to consider:

• ✅ Check if you’re entitled to redundancy payments – If you were also an employee of the company, you might be entitled to statutory redundancy pay.

• ✅ Consider your next steps – After liquidation, you might be ready to move forward and rebuild. An IP can offer guidance on how to approach your next career steps.

Contact us today

Taking the Right Steps with Your Bounce Back Loan Debt

Dealing with a Bounce Back Loan and company liquidation can be overwhelming, but with the right support, you can navigate the process legally and efficiently. By following this liquidation checklist, you ensure that you meet all necessary legal requirements while protecting your personal assets and career.

For tailored advice on closing your company with an outstanding Bounce Back Loan, contact Anderson Brookes today for a free consultation. Our licensed Insolvency Practitioners will guide you through every step of the process, ensuring that your company’s closure is handled in the best possible way.

If you’re also dealing with HMRC debt or other tax liabilities, we can help you understand your options. Our team is experienced in providing solutions to businesses facing financial difficulties, including helping you manage HMRC debts.

Free Consultation – advice@andersonbrookes.co.uk or call on 0800 1804 933 our freephone number (including from mobiles).

BBL Liquidation – Google Reviews 

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