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Barclays, Starling Bank and HSBC have reportedly filed nearly 70 winding-up petitions against companies that defaulted on pandemic-era borrowing. Many of the businesses involved appear to have been inactive for years, while some have either failed to file accounts or submitted dormant accounts.
This would seem to suggest that Bounce Back Loan recovery is entering a more formal phase. After anywhere up to 6 years of letters, arrears and unresolved company records, some lenders now seem prepared to ask the court for winding up orders.
We see this situation happening on a reasonably regular basis.
The company has effectively stopped trading, but it has not been formally closed. The director may have tried to apply for voluntary strike-off, only to find that the bank objects because the Bounce Back Loan remains unpaid. Nothing then appears to happen, sometimes for months or even years, leaving the director unsure whether the matter has quietly gone away.
After a while it is tempting to think the Bounce Back Loan has been sorted.
Sorry, the bottom line is that it probably has not.
A company becoming inactive does not cancel its liabilities. Filing dormant accounts does not write off a bank loan, and remaining on the Companies House register does not place the company beyond its creditors’ reach.
In many cases, the bank’s objection prevents the company from being struck off. The lender can then continue its recovery process and, where it considers it appropriate, issue a statutory demand or present a winding-up petition.
Well, it is probably a mixture of reasons, but timing is very likely to be part of the explanation.
Most Bounce Back Loans originally ran for six years. The earliest loans were issued in 2020, which means some are now reaching their original final repayment dates.
‘Pay As You Grow’ allowed some borrowers to extend the term to ten years, and other options allowed for temporary payment reductions and holidays. Not every borrower selected those options though, and some may already have used the flexibility available to them.
Banks have also faced pressure to make reasonable efforts to recover taxpayer-backed lending from Westminster. The government seem to be taking the position that the guarantee protected the lender if a qualifying loan was not repaid; it did not remove the borrower’s responsibility for the debt or the duty of the bank to try to collect it.
According to court filings, Starling filed 34 winding-up petitions, Barclays filed 26 and HSBC filed seven between June and the end of August 2026. An interesting aspect of all this, and perhaps an unexpected one, is that the companies reportedly included small businesses such as takeaways, tanning salons and other owner-managed enterprises.
Businesses borrowed £46.47 billion through the Bounce Back Loan Scheme.
Official figures covering the position on 30 June 2026 show that:
These figures need some thinking about if we want to interpret them properly. The £12 billion paid to lenders, for example, is not necessarily the final loss to taxpayers. A company remains liable for its debt after the bank receives money under the guarantee, and later recoveries could well reduce the public cost.
Let’s remember that there is a very big difference between a company that genuinely failed and a loan that was obtained or used improperly.
Many businesses borrowed legitimately during an extraordinarily difficult period and, often as a result of the pandemic and the fallout of it, subsequently became unable to repay.
Failure to repay does not, by itself, in any way prove fraud or misconduct.
Concerns about fraudulent activity may show up when, for example, turnover was deliberately overstated, duplicate loans were obtained, the company was already inactive when it applied, or the money was taken for personal use without any proper business purpose.
That said, the latest official figures show that lenders had flagged £1.88 billion of Bounce Back Loan lending as suspected fraud by 30 June 2026. Again, let’s remember that a suspicion ‘flag’ is not a finding of wrongdoing or an accusation of one. Any wrongdoing can and will only be established following proper investigation and, where necessary, legal proceedings.
Directors are often quite naturally worried about personal liability. Well, what you are and are not liable for hasn’t changed, and we have more information on that here.
As a limited company, the business is normally responsible for repaying its Bounce Back Loan. Personal guarantees were not permitted under the scheme, so an honest business failure should not ordinarily transfer the loan automatically to the director.
However, directors should not assume that limited liability protects them from every possible consequence. Personal issues can arise where a director has, for example:
The facts of each case matter. That is a very good reason directors should obtain advice rather than trying to decide for themselves that the company has no assets and can simply be forgotten.
If the company remains registered and has an unpaid Bounce Back Loan, do not ignore letters from the lender, debt collectors, solicitors or the court.
Start by establishing:
You should also retain the original application, bank statements, accounting records and evidence showing how the loan was used.
Receiving a winding-up petition considerably narrows the available time and options. Seeking advice before matters reach that point may allow the position to be reviewed calmly and an appropriate route agreed.
It is understandable that directors of businesses which stopped trading during or shortly after the pandemic may feel that they have been left in limbo. An unsuccessful strike-off application followed by years of limited contact can create the impression that nobody intends to take further action.
The recent winding-up petitions show why that assumption is unsafe.
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