Bounce Back Loans and dissolved companies: be very aware!

Bounce Back Loans and dissolved companies: be very aware!

Thursday, 03 June 2021

The Government has announced plans to introduce legislation, as soon as possible, which will enable them to disqualify directors of dissolved companies without firstly having to restore them to the companies register.

The snappy titled “Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill” has recently been introduced to the Houses of Parliament.

The Insolvency Service currently has powers, contained in the Company Directors Disqualification Act, to disqualify directors of insolvent companies which are subject to an insolvency process.

There are also powers to investigate and disqualify directors of “live” companies where it is considered in the public interest to do so.

These new proposals are aimed at those directors that attempt to avoid the scrutiny and investigation of an insolvency process by dissolving the company. 

Specifically, the Government will be looking at cases where Bounce Back Loans have been taken.

Whilst there is no firm date for the introduction of the legislation, it is proposed that when introduced the legislation will be retrospective.

Directors can be disqualified from holding office, as a director, for between 2 and 15 years dependent upon the seriousness of the misconduct.

The other aspect that directors need to consider is that if disqualified, then a compensation order can be made. This could be for the full extent of the company liabilities.

Effectively, this legislation will allow the Insolvency Service to disqualify and recover from directors of dissolved companies, without the additional cost and time delay of restoring the company to the companies register and subsequently petitioning for its liquidation.

Dissolution may well be appropriate, but it might just be worth checking whether a formal insolvency solution might provide directors with greater security and peace of mind.

If you have any concerns regarding Bounce Back Loans and dissolved companies, please get in touch with your usual contact. You can find contact details on the Our People section of the Larking Gowen website. Alternatively, call 0330 024 0888 or email

Andrew Kelsall 


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