Ask a Bankruptcy Lawyer. Get an Answer ASAP.
Hello, welcome to the website. My name is Tony, I can assist you with this.
The realisation from the asset sale would be distributed amongst the creditors by reference to the amount the company owed them.
This is a pari passu distribution.
The money goes to all creditors, and the directors are also creditors, as the company owes them money by virtue of the loan.
They are, I assume, unsecured, and hence treated like anybody else.
It could be an issue, yes, it might be that this is considered a "preference" under the Insolvency Act 1986. If the payment is made within two years of the onset of insolvency, then it could be challenged and set aside.
So this could result in a claim against the directors to get the money back into the company, which in turn, could result in a judgment against them, yes.
Also, their conduct would be considered and the liquidator potentially would file an adverse report, which could result in potential disqualification.
It might be worth you having a look at this on preferences: http://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter31/part4A/Part%202/Part%202.htm
No, not really. The key thing, with directors, is that they are connected parties, and the law assumes a desire to prefer them because of their position. In other words, it's logical they would want to pay themselves ahead of others, and the law assumes that to be be the case unless the directors can show otherwise (very hard).
D's are not normally liable for their company's debts.
Debts are usually treated pari pass, yes.
But, IF the directors are paid back ahead of everybody else within 2 years from the onset of insolvency, the risk that payment being considered a preference by a court. It might be challenged by a liquidator or creditor etc.
Unless it's secured.
Can I ask if you're happy with the service this evening please?