As the clock struck midnight on 1st January 2023, with as much hope and will for a good year, nothing changed in that exact moment. Not much changes in January at all. For struggling company directors the headaches (or hangover from 2022) are still there (and the tax man is lurking in the background too). There’s no instant remedy to resolve inflation, increasing utility bills or falling customer numbers.

On top of that, the government has now announced that it’s scaling back financial support for businesses to help with the cost of their energy bills. Rather than wholesale prices being capped, businesses will receive discounted rates on their energy usage. Support these businesses may have been banking on has suddenly reduced.

Company directors are concerned about two things right now:

1. How they are going to repay their bounce back loan
2. What the Insolvency Service is going to do if they can’t repay their bounce back loan

Let’s start with the latter.

What might the Insolvency Service do if you can’t repay your bounce back loan?

Right now the Insolvency Service has a clear focus. They want to tackle those companies and directors who abused covid-related financial support that they weren’t necessarily entitled to. As we’ve said before, if you applied for a bounce back loan and used it for its intended purpose, that’s not a problem.

 The Insolvency Service’s statutory civil and criminal enforcements powers have seen the following over the last year:

• Two fake PPE companies shut down after they fraudulently secured £180,000 from Covid-19 financial assistance schemes
• The boss of a nursing agency was disqualified for 11 years for securing £45,000 Bounce Back Loan despite company not being eligible
• A bankrupt caterer was imposed with 11 years of additional restrictions to protect creditors after he abused £70,000 worth of loans, including a Bounce Back Loan.
• A director of a pizza takeaway who fraudulently claimed a £20,000 bounce back loan was jailed for 2 years

In December 2021, the Insolvency Service was granted new powers to allow them to challenge directors who dissolve companies to avoid scrutiny and paying their liabilities, including Covid-19 financial support.

In just under a year since the new powers came into force they have obtained 13 disqualifications totalling 118 years against directors who dissolved companies following covid loan misuse.

The Insolvency Service is intent on holding those accountable. Over 1.4 million businesses took out a bounce back loan and some took advantage of support that many needed for survival.

Are you continuing to worry about repaying your bounce back loan?

At the risk of sounding like a broken record, if you’re worried about your bounce back loan repayments tomorrow or in the future, talk to us.

If you’re worried about the fact you’ve potentially used some of the loan for something other than what it was intended, talk to us.

If your finances are balanced on a knife edge and you feel at risk of any unexpected cashflow hit taking your business under, talk to us.

Taking action to address these financial problems is the best route forward. Ignoring them or playing the waiting game (and praying for a turnaround in luck) isn’t going to get you any closer to resolving your problems. However long you’ve had your business, you owe it to yourself, your staff, your customers, to look at the options and see if you can find a way back to a viable, profitable and stable business.

Contact us today by calling 0808 196 8676 or email help@trusolv.co.uk.