Why chase failed SMEs for unpaid Bounce Back debt?

Pursuing the owners and directors of collapsed companies for unpaid Bounce Back Loan debts is harsh

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.



Posted in

Gibraltar Financial Services Commission: A Lesson in Financial Regulation


The recent collapse of High Street Group and its security trustee, Castle Trust Management and Services, prompts a closer examination of regulatory practices. Along with…

Read More
de trafford

De Trafford Third Party Recovery: An Update


The recent financial collapse of multiple DeTrafford property development companies hassignificantly impacted purchasers. As they navigate the consequences, a glimmer of hope arises asthe wheels…

Read More
Northumberland Living

Northumberland Living Developments: Allegations and Challenges


Northumberland Living, In West Chevington Farm, Druridge Bay, is a development poised for completion. Only to be stalled by an apparent unforeseen historical conveyancing issue.…

Read More
st anne's limited development

St Anne’s Street Limited: The Perils of Off-Plan Property Purchases


Two luxury housing developments in Liverpool have faced major setbacks, leaving purchasers indespair and dreams of new homes shattered. St Anne’s Street Limited and Chaloner…

Read More