Why chase failed SMEs for unpaid Bounce Back debt?

The Insolvency Service recently announced plans to investigate business owners who close down companies without repaying the government’s Bounce Back Loan Scheme (BBLS) debts.
Considering the chronology of events, and state of the economy, such a strategy seems unjust. Here’s why…
The implementation, abandonment, and then reinstatement of lockdown restrictions caught business owners, and most people, off guard.
In March 2020, businesses in Britain were effectively ordered to stop trading. A month later, the British government introduced the Bounce Back Loan Scheme (BBLS). The scheme aimed to support businesses during the Covid-19 pandemic.
Over the next 7 months, around 1.4m business owners, fearing they might lose their companies, applied.
The government approved around £40bn of BB loans. Some companies survived. Sadly, others failed in 2021 because very few businesses owners anticipated the lockdown would be in place for so long.
With this in mind, it seems harsh to now:
- Punish directors and owners of companies that collapsed during the pandemic
- Accuse them of abusing the BBLS
Investigations of Bounce Back Loan abuse
The director will have to explain their actions if:
- The BBL was all spent
- The company still suffered
But a director has nothing to fear if they can explain how the funds supported the business.
For example, the Insolvency Service may investigate why the proceeds of a £40,000 BB loan were transferred into a director’s personal account in the months prior to the company’s demise.
The director’s behavior will be evaluated in regards to how they:
- Spent the BBL
- Managed the company’s debts
As a result, there should be no recriminations for a director who clearly demonstrates how the loan was transacted through the company to meet everyday expenses such as trade, rent, and salaries.
The 79th Group Update-What You Need To Know
Administrations, Court Cases, and What Loan Note Holders Must Know Now The financial collapse of companies within The 79th Group is rapidly entering a critical…
Read MoreT&T Trustees Appoint Administrators to 79th Luxury Living Six
Are Investor Interests Being Protected? A New Twist in The 79th Group Saga Loan note holders in 79th Luxury Living Six Ltd (LL6) were recently…
Read MoreA Difficult Truth: The 79th Group’s Latest Statement
On 10 April, The 79th Group issued a public statement in response to the ongoing investigation by the City of London Police, which can be…
Read MoreThe Cold Truth About The 79th Group, the Police, and Your Money
The 79th Group Loan Notes Recovery Over the past several months, a growing number of investors have come forward, alarmed and confused by what’s happening…
Read More