Barclays Bounce Back Loan Repayment Predicament

[Karalius]

Dear Consumer Action Group Community,

I hope this message finds you well. I am reaching out to seek urgent advice and guidance regarding a distressing situation I find myself in.

Back in 2020, amidst financial struggles with my business, I opted for a £50,000 bounce back loan through Barclays.

Unfortunately, despite the loan's assistance, my business took a turn for the worse when my Amazon selling privileges were unexpectedly revoked about six months later, leading to the abrupt closure of my business.

Subsequently, in 2021, I made the regrettable decision to invest £13,000 of the loan amount into cryptocurrency, which, as many of you may understand, proved to be a volatile and unwise choice.

Now, after learning the hard way about the legal implications of my actions, I find myself facing significant repercussions.

Recently, a law firm contacted me demanding repayment of the loan amount plus interest, totalling £16,302.

Regrettably, I am financially unable to meet this demand, as I lack the means to borrow or save up for such a sum. Despite efforts to engage with the law firm and explore potential repayment solutions, it seems that the proposed options remain beyond my current financial capacity.

Complicating matters further, I have already engaged a liquidator in 2023 to address the business closure, and I've paid substantial fees for their services. However, since then, communication has been sparse, and I am uncertain about the progress or potential implications of their involvement in this matter.

Feeling overwhelmed and unsure of my next steps, I am reaching out to this community for guidance and advice.

Should I continue to engage with the law firm, despite their demands seemingly surpassing my financial capabilities? Or would it be wiser to prioritize communication with the liquidators and seek alternative solutions through their assistance?

Additionally, if anyone has insights or experiences to share regarding similar situations or potential legal recourse, I would be immensely grateful for any guidance or support you can offer.

Time is of the essence, as the law firm has imposed a two-week deadline for repayment, which feels insurmountable given my circumstances. Your prompt assistance and expertise could make a significant difference in navigating this challenging ordeal.

Thank you in advance for your time, understanding, and any assistance you can provide.

I am more than happy to attach the letter from the law firm if this is required. 

Many thanks!

[fkofilee]

Which law firm and what does the letter say in full?

[dx100uk]

4 hours ago, Bardakas said:

made the regrettable decision to invest £13,000 of the loan amount into cryptocurrency

now that WAS silly.

4 hours ago, Bardakas said:

Despite efforts to engage with the law firm

unless it's a letter of claim, with a reply pack with an I&E form...IGNORE THEM.

4 hours ago, Bardakas said:

I have already engaged a liquidator in 2023 to address the business closure,

opps you've learned that was mistake... everything goes toward their fees.

4 hours ago, Bardakas said:

as the law firm has imposed a two-week deadline for repayment,

so what

scan the letter upto one multipage PDF please

read our upload guide carefully.  

lastly.

4 hours ago, Bardakas said:

Now, after learning the hard way about the legal implications of my actions, I find myself facing significant repercussions.

poss not as there maybe other options to address your issues, but let's get your ducks inline as i will suspect you have other debts too?

dx

 

 

 

[Karalius]

Hello,

Thank you for your advice and support so far.

I've attached the letter from Griffins Law, the company demanding repayment of the loan. It's important to note that I transferred the funds from my company account to my personal account before investing in cryptocurrency, which compounded the situation.

Additionally, I want to mention that I've already paid £6000 to the liquidators for their services.

I understand the seriousness of my actions and how they worsened the situation.

I'm planning to set up a Zoom meeting with the liquidators to discuss this further. Any additional advice or insights would be greatly appreciated.

Thank you all once again for your help.

Barclays Bounce Back Loan 13-02-2024.pdf

[dx100uk]

as far as i can make out, this is a law firm, instructed by their client, these Joint Liquidators you appointed, sending a letter of claim, by Email, regarding a £13k sum missing from your company accounts.

unless you have signed an agreement that allows service of official letters being sent by email with the liquidators, you can IGNORE THIS LETTER. Under the Pre Action Protocol all letters of claim (PAPLOC) etc must be sent by Royal Mail or surface mail. therefore it's 'fake'

Other than it being 'the funding source' Barclays, nor it being a 'BounceBack Loan' are anything to do with this and neither are mentioned.

they've already ripped you off for £6k fees and are now using a lot of legal willy waving to try and get another £16k out of you andf where that going to go.. into their pocket i expect.

now i'll admit i know zero about how liquidators works and what 'teeth' they ACTUALLY have, but at this stage that letter MEANS NOTHING and they should be totally ignored. seem just like a bunch of scammers to me.

can i just check this is YOU doing this and there have been NO court BK claims made against you forcing you to do any of this or go Bankrupt.?

if Barclays want their money, then await Barclays own chasing if that ever comes.

there are several threads here on Official Receivers and the scams they pull.

if you can, i would dump them!! or rid yourself of them.

dx

 

[Ethel Street]

@Bardakas  I agree with with much of my site colleague's comment above but in my (limited) experience dealing with Liquidators they have a lot of teeth under the Companies Act and will use them if they think it is necessary.

It seems that your company is now formally in liquidation and the Liquidators have discovered that you borrowed £13,000 from the company and channelled this via the DLA [Directors' Loan Account]***.  You have not repaid the loan and they are now demanding that you do.

As dx says it's irrelevant at this point that the money originated from a Barclays BB loan  to the company (although that could become a different issue later) and that you used the money to invest in cryptocurrency. They aren't interested in any of that in their Letter of Claim, it's simply that the company loaned you, a director, £13,000 and the company, which is now being run by the Liquidators, want it back + interest.

As a side issue they point out that in their opinion  you described the loan as a dividend when no such dividend payment could legally have been made, and more generally that you have been in breach of your fiduciary duties to the company. Possibly they are suggesting that further action for falsifying company records might be possible.

Because it's a loan from a company to one of its directors it isn't covered by the usual rules on consumer debt but by the specific rules in the Companies Act and the Insolvency Act, some of which the lawyers cite in their letter. I'm not a solicitor or an expert in company law but what they quote in paragraph 10 seems clear, the Liquidators can take you to court and seek a court order compelling you to repay the loan.

Whether you have any strictly legal defences I can't say, you'd need to instruct solictors with expertise in this area. And from what you say you don't dispute the basic facts of what happened. Was there any formal written agreement between you and the company regarding the transfer of the money to you? There should have been, it's a legal requirement.

As a practical matter though the key to what happens next will be your own financial circumstances.  If you can convince the Liquidators that you cannot pay it and have no realistic prospect of repaying it in the foreseeable future they may not pursue court action. That will need a full financial dislosure by you. Their prime objective is to recover money for the benefit of the company's creditors and they won't want to "throw good money after bad". But if, for example, you own a house they will expect you to sell it. Bear in mind that you may be required to disclose your finances in court where not disclosing assets would be a serious matter.

Although the letter was sent by email I see it's only dated February 13th so I wouldn't be surprised if it turns up in the post as well quite soon.

 

***EDIT see this explanation of DLAs, note paragraph 9 which deals with the situation you are in. https://www.visionaccountants.co.uk/insights/posts/director-loan-account-frequently-asked-questions

 

[Karalius]

Hi dx100,

I appreciate your insights on this matter and the clarity you've provided.

Understanding that official correspondence should typically come through traditional mail channels is certainly reassuring in light of the email from Griffins Law. Moreover, I don't recall signing any agreement that permits such correspondence via email.

As the sole director of the LTD company, I can confirm that there haven't been any court claims or bankruptcy proceedings initiated against me thus far.

Given your suggestion, I am seriously considering reevaluating my relationship with the liquidators, especially in light of the concerns you've raised about their practices.

I'll remain vigilant for any direct correspondence from Barclays and continue to exercise caution against these scammers.

 

Hi Ethel Street, and thanks for your explanation.

To be honest, I'm completely out of my depth here. I have very little understanding of the legalities surrounding running a company, and this situation has left me feeling completely overwhelmed.

Regarding the demand from Griffins Law, they do indeed seem to be asking for £13,000 plus £3,002 in interest. I didn't sign any formal agreement between myself and the company regarding the money transfer, as I wasn't aware that was necessary.

In terms of convincing the liquidators, my financial situation is quite limited. I don't own a home or have any significant savings. I do have a hire purchase vehicle with £8,000 still owing and a personal credit card with a balance of -£4,500, which I'm slowly paying off. Since my business failed, I've managed to secure a job, but it's just enough to cover my monthly expenses with a small amount leftover.

As for the concerns raised by Griffins Law about breaching fiduciary duties and potentially falsifying company records, I'm not sure where I stand legally. My accountant advised me that the bookkeeping for the investment was completed as an investment rather than dividends, as the company wasn't making any profits at the time. There wasn't any formal written agreement regarding the loan transfer, as far as I remember.

On another note, the liquidators have previously requested my financial situation, and I've promptly sent over all documents detailing my monthly expenses and income. I was hoping by disclosing my financial situation they would understand my inability to repay the loan. I'll take your advice and prepare for a potential court order, but unsure of what next steps I should prepare to take.

Thank you again both for your insights and guidance on this matter. It's reassuring to have some clarity amidst this mess I made.

[dx100uk]

32 minutes ago, Bardakas said:

my financial situation is quite limited. I don't own a home or have any significant savings. I do have a hire purchase vehicle with £8,000 still owing

well thats good news then.

they cant get a charging order on any property even if they do get a (potentially useless) CCJ given your financial situation. and as there is no right of forced entry on a consumer debt CCJ......

as your car is on HP and thus not an asset again should very worst happen a CCJ, pretty useless to them.

As i'll have a good guess they are quite aware a PAPLOC can't be sent by email & i've a feeling after all this time... that the email was just to see if you would wet yourself.

pers i'd drop all comms now they've done you no favours at all and dont ever respond until/unless you ever get a letter of claim by post.

dx

 

[Karalius]

Hey everyone,

I hope you're doing well. I wanted to provide an update and seek further advice regarding the situation I outlined in my previous post.

Following my initial message, I reached out to my liquidators last Wednesday (before making this post) to request a call back regarding the email I received from Griffins Law.

Today, they returned my call and provided some additional information, and I'd like to confirm if what they're saying aligns with your understanding and experiences.

According to my liquidator, Griffins Law is effectively acting on behalf of HMRC as their Client.

They explained that the government is now pushing for aggressive action to recoup these loans. Given that Barclays was the lender and the loan was government-backed, HMRC would have reimbursed Barclays the loaned amount.

The reason for targeting me specifically is because my investments were deemed risky and inappropriate for a scheme meant to aid struggling businesses.

When I expressed concern about the aggressive tone of their communications, my liquidator assured me that he would intervene to temper their approach and buy me some time to process the situation.

I've reiterated to him that I have no savings or significant assets aside from the cryptocurrency obtained through the liquidation process and PC equipment valued at approximately £1,000 or now less in total.

Despite explaining my limited financial means, my liquidator warned me that my current monthly surplus of £50-£100 wouldn't suffice as monthly repayment, and they may impose additional interest on the repayment amount. He suggested borrowing from friends or family to come up with a lump sum, proposing £5,000 as a potential resolution to close the case off. 

I'm feeling incredibly overwhelmed and uncertain about my next steps. While I could potentially borrow around £2,000 or slightly more, I'm hesitant to further exacerbate my financial woes and accumulate more debt, particularly given my existing credit card obligations.

However, it seems like I may not have many alternatives, and I may need to consider this option, even if it means taking a hit to resolve the matter.

I'd greatly appreciate any insights, advice, or perspectives you could offer on this situation.

I'm unsure whether to take my liquidator's advice or if I should continue to challenge the claims being made against me.

Thank you for your support and guidance.

[dx100uk]

17 minutes ago, Karalius said:

According to my liquidator, Griffins Law is effectively acting on behalf of HMRC as their Client.

well they would say that! if Barclays what their money, let barclays chase you then.

18 minutes ago, Karalius said:

my liquidator assured me that he would intervene to temper their approach and buy me some time to process the situation.

cause he means it...not. couldnt care less

19 minutes ago, Karalius said:

He suggested borrowing from friends or family to come up with a lump sum, proposing £5,000 as a potential resolution to close the case off. 

opps thats not allowed and if Barclays catch wind of that advice they'll eat him for breakfast. couldnt poss be he with a nice little commission to his back pocket now would it...

i would never ever believe what anything any advisor/broker nor IFA ever said to me .

dx 

[Karalius]

Hi everyone,

I hope you're all doing well.

I'm reaching out because I've just had another unpleasant call from Griffin Lawyers, and I'm feeling quite lost about what to do next. The same individual from the firm has called me again, and the conversation quickly escalated into harassment.

He questioned why I had contacted their client (my liquidator) and insinuated that it was inappropriate for me to do so. Furthermore, he resorted to threats of bankruptcy again if I couldn't immediately settle the debt. His tone was unsettling, almost coercing me into agreeing to some sort of payment plan.

Feeling overwhelmed, I mentioned that I was seeking advice and considering my options. Despite my attempts to assert my position, he persisted in pressuring me to complete an assets spreadsheet and return it promptly, while also requesting extensions of the deadline via email.

His persistence and aggressive demeanor have left me feeling intimidated and unsure of how to proceed.

I'm turning to you for guidance.

What should my next steps be in handling this situation?

Should I block this number completely?

Any advice or insights you can offer would be greatly appreciated.

Thank you for your support. 

[dx100uk]

stop speaking on the phone.. simple. you should never ever discuss debt on the phone end of. they can state all kinds of things, even lies to try and get money out of your that you cant prove later to any regulatory authority , you have ZERO papertrail of proof.

state everything now in writing via royal mail only please no emails no calls.

put the phone down.

dx

[Karalius]

Thanks dx. I will block their number and await for anything to come through mail. I assume take no action now unless they/Barclays send a letter in? 

[dx100uk]

see where they go.

though i dont think barclays never were nor never will be anything to do with this moving forward. as ethel street explained. its a simple case of you as a director paid yourself £13k and the liquidators dont like it.

tough cant get blood out of a stone. the very worst would be a civil court case and if you lose a CCJ and even thats pretty much useless to them. is your home jointly owed and mortgaged?

dx

[Karalius]

Thanks dx. I don't have a mortgage or any property, and if you call the assets that around my house i.e PC, clothes, iphone etc. 

Worse comes worse, I will take the CCJ. 

[dx100uk]

all useless in terms of a CCJ as they could never enforce it.

there is no right of forced entry for court bailiffs even if you did lose.

it's a dead duck for them on all counts which is why they are trying to mug you into paying now by one way or another.

dx

 

[Ethel Street]

The letter of claim was originally sent to you by email. Did you ever get a copy through the post as well?

[Karalius]

Hi, sorry for late response Ethel. No, just a copy through email. 

[BazzaS]

I doubt they’d go for a CCJ alone …. As has been pointed out, it (at least in its own!) is a toothless threat.

As this relates to what looks like an improper loan to the sole director, which has then been invested in a high-risk (cryptocurrency!) scheme : more likely (with, or without a CCJ)

a) action to disqualify the director from future directorships, and

b) bankruptcy proceedings.

in terms of the Companies Act, one can’t claim “ I have very little understanding of the legalities surrounding running a company," as as a director of a limited company the law imposes fiduciary duties. Who helped you set up the limited company? did they give you any pointers to advice?

(one company formation agent I used, albeit many years ago, provided the ebook version [current for then] of what is now)

https://www.lawpack.co.uk/how-run-limited-company/p

it lists the major advantages and disadvantages of a limited company and cites as a disadvantage;

” Please remember it’s not your money. Any money in the company’s bank account belongs to the company and it can only be taken out as a dividend or wage, or set against money you put into the business."
 

The Bounce Back loans were intended to support SME’s affected by coronavirus.

They weren’t intended to allow individuals to improperly siphon £13k off of a limited company to gamble on cryptocurrency, and (as they were/are) government backed …. The people have funded the OP’s £13k gamble (and loss).

It isn't unfair for there to be attempts to recover what they can, and civil action against the OP.

Have you (as the individual, not the company) declared the £13k for personal tax purposes?

Is it liable (as > £10k) for taxation / self-assessment.

https://www.gov.uk/directors-loans/you-owe-your-company-money

 

[Karalius]

Hi BazzaS,

Thank you for getting back to me. When I first started selling on Amazon, I set up the company online myself and opted for a virtual registered address. At that time, I was quite inexperienced in running a business and lacked a comprehensive understanding of its operations, which unfortunately led to its eventual failure. I never received any guidance or ebook on managing a business, which I now realize would have been invaluable.

I acknowledge that there will likely be repercussions for my actions, and I am prepared to accept responsibility for my mistakes and negligence. It seems inevitable that I will have to face the consequences.

One of my major errors was heeding the advice of friends who suggested transferring funds into my personal account and investing in cryptocurrency without seeking advice from an accountant. Looking back, I understand how misguided this decision was, but at the time, I lacked the necessary insight and guidance. I fully recognize my mistake and am willing to rectify it.

Regarding declarations, I also failed to declare these transactions, as my accountant had initially categorized the funds as investments. I don't know if it's wise for me to do that now? 

Thanks

[Ethel Street]

25 minutes ago, Karalius said:

Regarding declarations, I also failed to declare these transactions, as my accountant had initially categorized the funds as investments. I don't know if it's wise for me to do that now? 

You can't do that. Your company is now under the control of the Liquidaors and you can neither access nor change the company's financial records.

In any case you have already, according to the Liquidators' lawyer', attempted to claim it was an investment and they have rejected it on the basis that you have submitted no evidence to support the claim. "You responded on Wednesday, 6 December 2023, to the Joint Liquidator’s correspondence of 5 December 2023. You explained that the dividends were linked to the Company’s “investment in cryptocurrencies.” You provided no evidence to support your statements."  [Paragraph 9 of lawyer's letter]

[BazzaS]

If it was an investment : since a limited company “is, legally, a person” - then the company could have bought the cryptocurrency. The company didn't have to transfer the money to you to do so.

It would still have been unwise, but you'd likely have benefitted from the companies limited liability* : you'd not be on the hook for 13k and at risk of being disqualified from future directorships.

* likely benefited as one can, in rare circumstances, be held liable personally for ltd company debts:

(absent having given a personal guarantee)

if one's actions are so egregious as to "pierce the corporate veil" : such as knowingly trading while insolvent, or unfairly offering a preference to a creditor above other creditors.

Given the company could have invested: I can see why the bank and liquidators will take some persuading it was the company investing.

Declare to who?

To the liquidators: yes, you have a duty to declare company transactions.

To HMRC as (personal) income : yes, see link above.

[Karalius]

Hi Ethel,

Regarding the dividends, although they were tied to the investment, no documentation was requested at the time. However, I can furnish evidence indicating the transfer of funds from the business account to my personal account, followed by conversion to USDT on Binance, and subsequently the purchase of the cryptocurrency on KuCoin. Currently, the cryptocurrency remains in my KuCoin account without any transactions since the initial purchase.

Hi Bazzas,

Concerning your inquiry about purchasing cryptocurrency from the company account, I encountered difficulties due to bank restrictions, prompting me to transfer the funds to my personal account for direct purchase. Notably, these transactions occurred during a period when the company was financially solvent, evidenced by ongoing sales on platforms like Amazon. The unforeseen overnight collapse of the company was unexpected.

Regarding tax filing, it seems opting for "The loan is ‘written off’ or ‘released’ (not repaid) including if the company goes into liquidation" would be appropriate? This would entail me completing form P11D and submitting a self-assessment I assume? Despite being unaccustomed to such filings, given my history of being primarily employed, I'm considering seeking advice from an accountant. Assuming not fulfilling these obligations could result in further worse consequences I'm unsure of when liquidation comes to light in court? 

Thank you

[Ethel Street]

@Karalius As a matter of interest of the £13,000 you invested in cryptocurrency how much is now left? You say that what is left is still in your KuCoin wallet, what is that worth In £££ today? Given the explanation you gave them I'm surprised they didn't ask for it to be immediately repaid to the company.

Where do matters now stand? The solicitor's letter wanted you to pay £16k by 27th February which you couldn't and didn't do. That was a week ago. So now what? The ball is the solicitor's court isn't it? He suggested you borrow the money to pay the  liquidators/company at least £5k but you refused (rightly IMO - I think suggesting people pay off one debt by borrowing from somewhere else is plain wrong and irresponsible, even if it is borrowing from family and friends).

So are you now waiting to see the solicitor's next move? It may well be court action and bankruptcy proceedings, but if you have made a full disclosure of your financial situation it is still possible the liquidators will decide it isn't worth pursuing you any further. My guess is the solicitor is seeking further instructions from his client, the liquidators.

[dx100uk]

in days gone the DCA's got fined serious sums by the authorities for suggesting people borrow from family and friends......