Revealed: What happens to Bounce Back loans if an agency fails

The Negotiator asked one of the UK’s leading insolvency experts, Keith Tully, to give his independent view.

keith tully bounce back loans

Company Administration is essentially a balancing act between generating funds for creditors through asset sales, while an administrator exerts control over the company in the hope to revive the ailing business.

As seen with our handling of Humberts, the 175-year-old, national residential and commercial property agency fell into Company Administration, driven by the ultimate aim to survive company closure and act in the best interest of creditors, including staff and lenders.

Exiting the procedure through the sale process, it is common for the route to end in a variety of ways, including a Company Voluntary Arrangement or CVA.

But this begs the question; where do agency owners stand when it comes to repayments of Covid-related government Bounce Back loans?

During company administration, the Bounce Back Loan lender will be classed as an unsecured creditor, according to the order of priority prescribed by the Insolvency Act 1986.

During the insolvency procedure, any unsecured debts which cannot be repaid will be written off.

In some cases, a Company Voluntary Arrangement (CVA) may be the result of a company administration, for which your Bounce Back Loan repayment responsibilities will differ.


A CVA is a company restructuring procedure for residential agencies crippled by expectations to raise volumes of cash for creditors.

If money allocated for company cash flow is being snapped up to repay creditors, restructuring creditor payments into a single monthly instalment could help reduce the financial burden endured by your business.

Bounce Back Loans can be included as part of this agreement with creditors and will not impact personal liability, unlike the Coronavirus Business Interruption Loan Scheme, for which selected lenders have been known to impose personal guarantees.

The ultimate end goal for both procedures is to compensate creditors and stabilise your agency for the year ahead.

Keith Tully is a partner at Real Business Rescue, part of the Begbies Traynor Group.

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