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A Guide to insolvency – Post Covid 19

The Covid 19 pandemic has created a whole strata of new words like SEISS and Furlough within the already convoluted vocabulary of the insolvency industry.

Today - Bounce Back Loans.

Here’s a simple question:

When Bounce Back Loans were introduced on 27th April 2020 it was announced “The government guarantees 100% of the loan”

What do you think this actually means:-

1) Directors of Limited Companies will not be required to personally guarantee bounce back loans?


2) Directors of Limited Companies might not be required to personally guarantee bounce back loans?


3) Directors of Limited Companies will definitely be required to personally guarantee bounce back loans?

In 2020 you were certainly intended to believe the answer to be No 1. However in the cold light of realisation, in Late 2021 it is not quite so clear cut.

The Government have now made it clear that they will cover 100% of a banks losses on a bounce back loan for a failed company, only provided “They take every step necessary to recover the debt".

In real terms this means that the banks must;

a) Call up any pre existing "all monies" guarantees (These are inevitable for any company borrowings above around £10,000) and force payment out of the Directors – if they cannot get this payment then to petition for their bankruptcy.

b) Petition the High Court to compulsorily liquidate the company.

This immediately opens the door to The Official Receiver or any appointed external liquidator to demand repayment of any director borrowings – typically concealed as “dividends” or “consultancy fees”.

To enforce these demands the banks might again find it necessary the then Petition for the Director’s personal bankruptcy – to free up funds by selling the family home etc.

Suddenly these oh so easy loans aren’t looking quite as attractive as they did in April 2020 – and The Ancojada Insolvency "Directors’ Protection Package" is looking very desirable indeed.

If you have any questions or concerns about insolvency, either personal or inn relation to your business, please call us and ask to speak to one of our Insolvency Experts.


Ancojada Limited is not authorised or regulated to provide financial advice.

All financial & insolvency advice is provided by other regulated businesses.

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