My Company cannot repay its Bounce Back Loan
The Bounce Back Loan Scheme (BBLS) was a lifeline for many businesses during the COVID-19 pandemic, providing much-needed financial support. However, as repayment deadlines loom, some businesses find themselves unable to meet these obligations. If a business is struggling to repay a Bounce Back Loan, it has several insolvency options to consider.
- Company Voluntary Arrangement (CVA)
A Company Voluntary Arrangement (CVA) is a formal agreement between a business and its creditors to repay a portion or the entirety of its debts over a fixed period. This option allows the business to continue trading while working to restructure its debts. The CVA process requires approval from at least 75% of the creditors by value, and once approved, it becomes binding on all creditors.
- Administration
Administration is a process where an appointed administrator takes control of the business to restructure it, sell its assets, or find a buyer. The primary goal is to rescue the company as a going concern or to achieve a better outcome for creditors than if the company were liquidated. During administration, there is a moratorium that prevents creditors from taking legal action against the company, providing some breathing space to devise a plan.
- Creditors’ Voluntary Liquidation (CVL)
If the business is no longer viable, a Creditors’ Voluntary Liquidation (CVL) may be the best option. In a CVL, the company’s directors voluntarily choose to wind up the company and liquidate its assets to pay off creditors. An insolvency practitioner is appointed to oversee the process, which involves selling the company’s assets and distributing the proceeds to creditors. This option typically leads to the closure of the business.
- Pre-Pack Administration
Pre-pack administration involves arranging the sale of the company’s business and assets before formally appointing administrators. This method can help preserve the business’s value and save jobs by selling the viable parts of the company to a new owner, often a connected party like existing directors. The sale is executed immediately upon the administrator’s appointment, minimizing disruption.
- Informal Arrangements
Before resorting to formal insolvency procedures, businesses might explore informal arrangements with their creditors. This could involve negotiating new repayment terms or a partial write-off of the debt. Such arrangements can provide a quicker and less costly solution compared to formal insolvency processes. However, they rely heavily on the goodwill and agreement of creditors.
Can Keywood Group – Licensed Insolvency Practitioners help?
Facing insolvency is a daunting prospect for any business, but understanding the available options can help manage the situation more effectively. Seeking professional advice from insolvency practitioners is crucial to navigate these complex processes and determine the best course of action. By exploring these options, businesses can find a way to either restructure and survive or exit the market in an orderly manner, minimizing the impact on creditors and stakeholders.
Keywood Group is a firm of Licensed Insolvency Practitioners with offices based in Birmingham and London. Please get in touch for a free consultation by calling us today on 0121 201 0399 or 0208 912 0399
