Credicorp
What happens to a UK company loan if the company is wound up or enters administration?
Insolvency is a frightening word, and if your company is heading towards being wound up or entering administration, the last thing you need is uncertainty about what it means for your loan. Here are the basics, set out calmly and honestly. The most important message is this: talk to us early. The sooner we understand your situation, the more we can do to help, and the more options are likely to be open.
Facing financial difficulty does not make you a failure as a director. Many capable people go through it. What matters now is getting the right information and the right advice.
These processes are formal, and they have specific meanings:
Which process applies, and what it involves, depends on your company's circumstances, so independent advice is essential.
We lend to your company, not to you personally, and we do not take a personal guarantee from its director. That is an important point: the loan is the company's liability. If the company becomes insolvent, we become one of its creditors, and the loan is dealt with through the formal process alongside the company's other debts, under the control of the insolvency practitioner.
Before things reach that stage, it is well worth exploring whether difficulty can be resolved another way. Our hardship and forbearance process sets out the payment arrangements, short freezes and variations we can sometimes put in place to help a company recover without a formal insolvency at all.
A quick note on the terms
These processes are formal, and they have specific meanings:
Which process applies, and what it involves, depends on your company's circumstances, so independent advice is essential.
- Administration is a process that aims to rescue a company as a going concern, or to get a better result for creditors than winding up would, by placing it under the control of a licensed insolvency practitioner.
- Winding up (liquidation) is the process of closing a company down and distributing whatever assets remain to those it owes money to, in an order set by law.
What happens to the loan
We lend to your company, not to you personally, and we do not take a personal guarantee from its director. That is an important point: the loan is the company's liability. If the company becomes insolvent, we become one of its creditors, and the loan is dealt with through the formal process alongside the company's other debts, under the control of the insolvency practitioner.
Before things reach that stage, it is well worth exploring whether difficulty can be resolved another way. Our hardship and forbearance process sets out the payment arrangements, short freezes and variations we can sometimes put in place to help a company recover without a formal insolvency at all.
The role of a licensed insolvency practitioner
A licensed insolvency practitioner is a qualified, regulated professional who administers formal insolvency processes. They take control of the situation, deal with creditors including us, and act in line with their legal duties. If you are considering administration or winding up, you should take advice from one before making decisions. You can find a licensed practitioner through R3, the trade body for insolvency professionals, at r3.org.uk.
Talk to us early
If you can see trouble coming, please do not wait until a formal process has begun. Contact us while there is still time to consider alternatives. We will treat the conversation with discretion and respect, and we will be honest with you about what is and is not possible. Even where insolvency turns out to be the right answer, talking to us early helps the process run more smoothly for everyone.
Where to get free advice
You do not have to work this out alone, and good advice is free. For your business, Business Debtline offers free, confidential and independent debt advice for small businesses and the self-employed at businessdebtline.org or on 0800 197 6026. They can help you understand your company's options and prepare for next steps. For a fuller list of free organisations, including how to find a licensed insolvency practitioner, see where can I get free independent debt advice in the UK?.
Whatever stage you are at, reaching out early, to us and to a qualified adviser, gives your company the best chance of a fair and orderly outcome.
Related questions
Ready when your company is
A 5-minute application. AI decision in minutes, confirmed by a real underwriter. Same-day funding on approval. No personal guarantee.