In general terms, this is not likely to work but technically it is possible to dissolve a company with a Bounce Back Loan but you have to satisfy certain strict criteria.
Can I Strike Off A Company With A Bounce Back Loan
It is technically possible to dissolve or strike off a Limited Company with a Bounce Back Loan that is outstanding. However, it is generally not recommended because it is likely that it would be objected to, even if you do satisfy the relevant criteria.
What Is The Criteria To Strike Off A Limited Company?
The criteria to strike off or dissolve a Limited Company is:
- No change of name in the last three months.
- No trading has taken place in the last three months.
- No disposal of assets for value prior to cessation of trading in the last three months prior to the application being made to dissolve the company.
- The company must not be in Administration or no processes of placing the company into Administration presently arising.
- The company must not be being wound up and placed into Liquidation.
- The company must not have an existing proposal for a Company Voluntary Arrangement outstanding or in process.
What Is Trading For The Purposes Of A Dissolution Application?
Trading is not the payment of a liability.
Why Might An Objection Be Lodged To Dissolving A Company With A Bounce Back Loan?
The reason that an objection might be lodged if you were to attempt to dissolve or strike off a Limited Company with a Bounce Back Loan is because if a company has debts that it cannot pay it is insolvent. If a Limited Company is insolvent and unable to pay its debts when they fall due there are procedures set out in the Insolvency Act 1986 that a company should go through.
An example of such a procedure is Creditors Voluntary Liquidation. A Creditors Voluntary Liquidation (“CVL”) is a procedure in which the company Directors take action to place their company into Liquidation by taking the responsible action to follow what is likely to be the correct procedure to close down the Limited Company.
A Liquidation is an orderly winding up and finalisation of a Limited Company’s affairs after it has ceased trading. It is a process that is overseen by a Liquidator.
If you attempt to bypass a Liquidation procedure by seeking to strike off your Limited Company then creditors owed money such as the Bounce Back Loan creditor that has not been repaid may consider that the correct process has not been undertaken to wind down your company.
What Happens If A Creditor Objected To My Company Being Struck Off?
If a creditor objected to the striking off of your company or its dissolution then you should typically receive from Companies House a notice informing you of this position. You would then have a number of options:
- Do nothing.
- Apply to go into Creditors Voluntary Liquidation.
- Apply to go into Compulsory Liquidation.
- Negotiate with the objecting creditor to see if further action can be avoided.
- Take professional advice.
The creditor objecting to the striking off of the Limited Company can then take action to wind up the company themselves by issuing a Winding Up Petition or issuing legal proceedings seeking a judgment to be registered against the Limited Company.
If however this creditor who is objecting to the striking off of the Limited Company does nothing, they can still usually lodge a further objection within three months of the last one and as a result, extend the period in which nothing might happen to the company for a further three months. However, it is likely that after six months if neither the company nor the creditor takes any legal steps to resolve matters either by issuing legal proceedings or to formally wind up its affairs by way of a Liquidation then the company will be dissolved at Companies House.
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