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Dissolved Power

There have been recent changes with the dissolved powers. How might this affect you and your business? Have a read about the new Bill down below and do not hesitate to get in touch with us if you feel that you might need some support on this issue.

Recovering funds

Businesses and other people posed some incredibly tough challenges over the course of the pandemic. People had to stay at home and face unprecedented challenges whilst businesses were trying to stay afloat. The government introduced schemes such as the Bounce Back Loan scheme (BBLS) to counter the financial hardship that had been caused as a result of the pandemic.

However, while most applications were made in good faith, a selection of them were deemed to have undermined the rules that were in place. This prompted action in early 2021 when the Government decided to respond with action against those who were seen to have bent the rules. It’s worth noting, though, that the Insolvency Service had been looking for tougher measures on former directors of dissolved companies for some time.

The recovery process now includes the use of recovery agents deployed mainly by the banks who lent the bounce back loans, they seem to have extended powers to collect the funds from collection of high ticket items (cars) to charges against properties.

Tackling phoenix companies

The measure had been initially aimed at tackling the growing problem of phoenixing: when a dissolved company reappears doing the same thing, minus its debts. This happens regularly, potentially affecting small trade creditors and employees in the process. 

While the Insolvency Service has always had the capacity to tackle any directors who were perceived as being a little dodgy, it could only take action after restoring dissolved companies to the Companies House – before pushing for insolvency. 

This process was not very efficient; it cost excess time and money. These new measures will ensure that the Insolvency Service will be better equipped to take on these directors, without dither, delay, and distraction. 

A desire for more power grew when there was an apparent increase in the number of companies that were believed to be abusing the system in place. The Insolvency Service noted that Bounce Back Loans promoted more misuse of funds. 

Putting it together

A desire for more power grew when there was an apparent increase in the number of companies that were believed to be abusing the system in place. The Insolvency Service noted that Bounce Back Loans promoted more misuse of funds.

The Insolvency Service got several teams on-side in order to push through this legislation, aiming for efficiency with time and money. 

The Department of Levelling Up Housing and Communities helped to push this discussion through parliament, alongside the impact of Business Rates throughout the pandemic. Many teams also collaborated in the background to provide the backbone for this Bill. 

Eventually, the Bill made its way through parliament and it was generally well-received by parliamentarians. Essentially, the Bill has been passed through a series of hoops and it is going to make a big impact in the wider world of business. 

dissolved power

What happens to directors?

The Investigation and Enforcement Services are now ready to put this policy into action. They will be tasked with taking directors to task if they feel that the dissolution process has been abused in any way. This could include not paying liabilities to staff, creditors, or taxpayers, and avoiding Bounce Back Loan repayments.

What should I do if I am affected?

Directors can be easily taken down the wrong path and we sympathise with that. However, this tough new legislation will not be as sympathetic. 

It is clear that the Insolvency Service are wanting to clamp down on what they perceive to be financial misuse. Nonetheless, we have your back. If you feel you might need support and advice then you should get in touch with us. We can work out a clear and coherent plan for you to go forward with.


  • Avatar of Sarah Jones Sarah Jones says:

    Thank you so much for your support

    Really glad I have managed to walk away from my situation , I honestly could not have done this without your support

    Thank you to all the team once again 🙏

    • Avatar of admin admin says:

      Hi Sarah

      I am glad we managed to support you at a time when you needed us the most, it is our team’s job to make sure you get the best advice and support

      All the best

      Adam 🙂

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