The form is short, the fee is £33, and Companies House will, in theory, strike a dormant company off the register within three months of filing. That is the story directors are told about DS01, and it is the story they try to apply to a company that still has a live Bounce Back Loan on the books.
It almost never works. Lenders routinely object, the strike-off is suspended, the company remains on the register in a state of limbo, and the attempt itself becomes a piece of evidence that a later Insolvency Service investigation reads as evasion rather than tidiness.
Below you will find why you cannot dissolve a company with an outstanding Bounce Back Loan, what actually happens when directors try, and the route that does work: a Creditors’ Voluntary Liquidation, including how the BBL balance is treated inside it.
Why You Cannot Dissolve a Company With an Outstanding Bounce Back Loan
Voluntary strike-off under section 1003 of the Companies Act 2006 is designed for one specific situation: a solvent company that has genuinely ceased to trade, has no outstanding liabilities, and wants a clean exit from the register. It is an administrative process, not an insolvency one.
A Bounce Back Loan is an outstanding liability. It does not matter that the government underwrote the lender. It does not matter that no personal guarantee was given. The loan remains a debt of the company until it is repaid or written off through a formal insolvency process.
Section 1006 of the Companies Act gives creditors and interested parties the right to object to a proposed strike-off. Lenders routinely exercise that right on BBL cases. In practice:
The DS01 application is filed.
Companies House publishes notice in The Gazette (the required public notice of intended strike-off).
The lender sees the notice and files an objection, either directly, through the British Business Bank, or through the Insolvency Service.
Companies House suspends the strike-off. The company remains on the register.
The matter is, at that point, visible to the Insolvency Service, which can open a director-conduct investigation.
The entire exercise produces no benefit, costs you £33, and signals to the people whose opinion matters most that you have tried to walk away from a live creditor. It is the single most consistently counter-productive move in the whole BBL-closure map, and in our experience it never produces the result directors expect.
What Happens When Directors Try to Dissolve a Bounce Back Loan Company Anyway
The specific sequence of consequences:
Insolvency Service investigation. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 specifically extended the Insolvency Service’s investigatory powers to cover former directors of dissolved companies where BBL misuse is suspected. Attempted strike-off of a company with unpaid BBL is a pattern that triggers that power directly.
Reinstatement to the register. Even if the strike-off somehow gets through, creditors can apply to restore the company for up to twenty years. Reinstatement is routine on BBL defaults, and the restored company is then pursued through the insolvency process the director tried to avoid.
Personal conduct findings. Where misuse of the loan is established (inflated turnover, personal expenditure from loan funds, repayment of director’s loan account from BBL), the Insolvency Service can obtain a director disqualification order of 2 to 15 years, often with a compensation order attached.
Criminal referral. Serious cases, typically those involving Bounce Back Loan fraud, multiple loans, or sums above £100,000, are passed to criminal investigation agencies. Custodial sentences of three to seven years, plus confiscation orders under the Proceeds of Crime Act 2002, sit at the hard end of this track.
Reputational consequences. Disqualifications are published on the public register, indexed by name, and routinely surface on background checks for years afterwards.
None of that is the outcome you were trying to achieve by filing DS01. All of it is the outcome you make more likely by filing it. Our advice to any director in this position: do not file the DS01 without taking specialist advice first.
Closing a Bounce Back Loan Company Through Creditors’ Voluntary Liquidation
The route that works, the formal mechanism designed for exactly this situation, is a Creditors’ Voluntary Liquidation. A CVL is the standard insolvency process for a company that cannot pay its debts and has no realistic prospect of being rescued. Our licensed IPs conduct these regularly and the process is well-mapped.
The CVL mechanics:
Directors resolve to place the company into liquidation. A board resolution, followed by a shareholders’ resolution, initiates the process.
Creditors are formally notified, including the BBL lender, and a decision procedure is held (usually a deemed consent procedure or a virtual meeting) for creditors to approve the liquidator’s appointment.
The liquidator takes control, realises company assets, investigates director conduct, and distributes proceeds to creditors in the statutory order.
Where no misconduct is found, the remaining BBL balance is written off as part of the liquidation, and the company is formally dissolved.
The last point is the one directors underestimate. A CVL conducted with clean books does exactly what you hoped dissolution would do: ends the company, writes off the unpaid BBL, and closes the file. The difference is that the CVL does it lawfully. Our licensed IPs conduct this process regularly and can guide you through each step.
Protecting Yourself Through a Bounce Back Loan CVL
The CVL protects you from personal liability on the BBL itself. It does not protect you from misconduct findings if misconduct is present. Your behaviour during the lead-up to liquidation is the single biggest determinant of the outcome, and in our practice we help directors understand that distinction before the process begins.
Pull the paperwork cleanly. The original BBL application, the bank statements from the six months either side of the draw-down, the director’s loan account, and the management accounts for the period. Do not edit, “tidy”, or backdate anything. The liquidator reconstructs the position from bank records regardless.
Document use-of-funds honestly. Where the loan went to payroll, rent, stock, and working capital, that is straightforward. Where it went to personal expenditure or to clear a director’s loan account, that is the conversation to have with the IP before the liquidation begins, not after.
Correct what can be corrected. If the application overstated turnover, the Voluntary Repayment Scheme lets you hand back the excess proactively. If loan funds were personally extracted, reinstating them to the company before insolvency changes the shape of any subsequent challenge materially.
Engage with the lender and the IP, do not evade. Cooperation is consistently the lowest-cost path through this. Evasion produces the worst outcomes almost every time.
Contemporaneous records over reconstructions. Board minutes made at the time, documenting the reasoning for decisions, carry enormous evidential weight later. Reconstructions from memory, a year into a conduct investigation, carry almost none.
Your Next Step on a Bounce Back Loan Company Closure
If you are considering closing a company with an outstanding BBL, the call that actually changes the outcome is a confidential conversation with our licensed insolvency practitioners before any form is filed. Bring the loan agreement, the last two sets of accounts, the bank statements from six months either side of the draw-down, and a rough use-of-funds map.
From that conversation, you come out with three things: a clear view on whether a CVL is the right route; an estimate of fees (CVL fees for smaller companies typically run £3,000–£6,000, often recoverable from company assets); and, if the use-of-funds review raises any misuse concerns, a plan for voluntary correction before the formal process starts.
None of those conversations is improved by waiting for a strike-off objection to force it. Our licensed IPs handle this initial review as a free confidential call.
FAQs on Dissolving a Company With a Bounce Back Loan
Can I dissolve my company if I have partly repaid the Bounce Back Loan?
No. Under section 1003 of the Companies Act 2006, voluntary strike-off requires the company to have no outstanding liabilities. Any remaining BBL balance is an outstanding liability, regardless of how much has been repaid. A CVL is the appropriate route where the balance cannot be cleared.
What happens if my Bounce Back Loan strike-off application is rejected?
The strike-off is suspended, not deleted. The company remains on the register, the BBL remains live, and the attempted strike-off becomes visible to the Insolvency Service. At that point the director’s options are: reinstate the Companies House filings that have lapsed during the strike-off attempt (annual accounts, confirmation statement), then either pay the BBL down or enter CVL.
Am I personally liable if the company fails to repay the Bounce Back Loan?
Not by default. BBLs were advanced without personal guarantees, and cannot be enforced against a director’s main home or main vehicle under the scheme rules. Personal liability arises only where misuse of funds is established, where inflated turnover on the application amounts to fraud, or where wrongful trading or misfeasance is found during the CVL investigation.
Does it matter if I used the Bounce Back Loan for personal expenses?
Yes, materially. Use of BBL funds for personal expenditure is a breach of the scheme rules and, in insolvency, a breach of director’s duty. Consequences range from a liquidator’s claim for a personal contribution (civil) to fraud prosecution (criminal), depending on the amounts and the evidence of intent. Voluntary repayment of the misapplied portion before liquidation is the cleanest mitigation.
How does dissolution differ in Scotland or Northern Ireland?
The underlying principles are the same, a company with an outstanding BBL cannot be struck off. Procedural detail varies: Scottish insolvency is handled through the Accountant in Bankruptcy framework, Northern Ireland through the Insolvency Service NI. The statutory rights of BBL lenders to object to strike-off are equivalent across the UK.
What if I cannot afford Bounce Back Loan liquidation fees?
Most licensed IPs will quote against realisable company assets first, meaning fees come out of the liquidation estate rather than the director’s pocket. Where assets are insufficient, some IPs accept staged payment from the director. A handful decline cases they cannot fund; a brief free call with two or three IPs usually produces a workable quote.
Could a Bounce Back Loan affect my ability to start another company?
An unpaid BBL, on its own, does not prevent a director from starting or running another limited company. A disqualification order arising from BBL misuse does. And that disqualification can last up to fifteen years, covering director and de facto director roles in any UK company during that period.
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