The Situation
Claire operated a boutique fashion shop on a busy high street in Liverpool.
Before the pandemic, turnover was around £120,000 annually, with steady profit and a small team of part-time staff.
During Covid-19, her income plummeted, and despite government grants and loans, the business could not recover to pre-pandemic levels.
Claire had taken a £35,000 Bounce Back Loan and entered into a payment plan with her landlord for the rent that had accumulated during lockdown.
But after footfall dropped again in 2023 and utility costs rose, she began missing loan and rent payments.
She also owed around £15,000 to fashion wholesalers and £12,000 in PAYE.
When her landlord issued a statutory demand and she began receiving letters from debt collectors acting on behalf of the BBL lender, Claire contacted Business Helpline.
The Director’s Concerns
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“What happens if I can’t repay the Bounce Back Loan?”
- “Can I be made personally liable if I close the company?”
- “Will my staff get their wages?”
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“Is it better to walk away or try and keep going?”
The Solution: Creditors Voluntary Liquidation (CVL)
Our advisor helped Claire understand her obligations and options.
We assessed whether a strike off was possible, but outstanding debts and threats of legal action made that route unsuitable.
A CVL was the most appropriate route to:
- Legally close the company and protect Claire from further creditor action
- Ensure employee claims (unpaid wages and redundancy) were honoured via the RPS
- Write off the Bounce Back Loan as part of the company’s insolvent liabilities
- Avoid landlord court action and CCJs
We arranged a video consultation with an insolvency practitioner who walked Claire through the process.
Staff were issued redundancy letters, and creditors were formally notified.
The Outcome
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The CVL process was initiated within two weeks
- Claire’s staff received their redundancy pay and unpaid wages via government schemes
- The BBL, rent arrears, and supplier debts were written off in liquidation
- Claire faced no personal repercussions – no guarantees were in place
- She is now working in online retail part-time while recovering financially
Key Takeaways
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A CVL can be used to deal with unpaid Bounce Back Loans and avoid personal risk
- Landlord pressure can be addressed legally through formal insolvency
- Redundancy claims protect employees even when a company fails
”"I didn’t realise there was a formal way to close down and not be left with the debt myself. Business Helpline explained everything without judgment."
ClaireFormer Boutique Owner
