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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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In August 2011 my wife and I gave my daughter and son-in-law

Resolved Question:

In August 2011 my wife and I gave my daughter and son-in-law a loan of £150k to invest in a local existing business and become directors of the company. The company was trading as a Private Limited Co. with shares, and with the £150K my son-in-law purchased 24 shares for £100K and 8 shares to my daughter for £50K as she was also employed elsewhere.
A solicitor drew up a ‘Promissory Note’ signed by all four parties. In the note there is no mention of a repayment schedule other than to say that the lenders may call for immediate repayment of the principle sum within 28 days should the marriage end on a permanent basis. On a private verbal agreement they were to pay £500 per month to pay off the debt.
Things did not work out within the company and my daughter resigned as a director and left the company in June 2014 still with the 8 shares which the other directors refused to buy back, other than to offer a ‘good will gesture payment’ which of course was a fraction of what was paid for the shares and was so declined. Because of some ‘bad feeling’ and in order that my daughter does not benefit from her shares, the company no longer pays a dividend on shares and profits are paid in directors’ wages etc.. I know this is not how they would like to run the company but they are sticking to it at the moment.
My now ex-son-in-law is still with the company but is now divorced from my daughter.
For a short time after their separation my son-in-law continued to pay the £500 per month. However, this has now stopped as he says he can no longer afford to pay and our relationship has broken down, which I think will lead to court action in the long term. Under the terms of the ‘Promissory Note’ I could ask him to repay the balance of the loan in full, but as I know he has little money and possibly large credit card loans there would be little point in doing so.
My daughter and he still have a joint outstanding mortgage on a property which has some equity in it and is yet to be settled as part of their divorce.
Questions:
1 Could I take out a CCJ against him with a charge on the joint property or would the fact that it is a joint mortgage be a problem? I understand the mortgage co. would be paid first then my daughter as the second name on the mortgage then what is left would come to me, but which would still not be enough to repay the debt. Could I still then look for the outstanding to be repaid?
2 Would he be allowed to declare himself bankrupt, as although he could say he has no money he still has equity in the house.
3 If he did declare himself bankrupt could I still have a charge on his property, or even get a charge to make him sell it?
4 What other course of action could he take to make life difficult for us and get out of repaying his debt.
Alan Price
Submitted: 1 year ago.
Category: Law
Expert:  Ash replied 1 year ago.
Hello Alan my name is ***** ***** I will help you.
For now please let me know whether there is any form of shareholder or directors agreement?
Customer: replied 1 year ago.
I have a copy of the Articles of Association but I'm not sure if there is a 'share holders' agreement'.
Expert:  Ash replied 1 year ago.
Was it loaned to the person or company?
Customer: replied 1 year ago.
The loan was to my daughter and son-in-law. Nothing to do with the company or anyone else.
Expert:  Ash replied 1 year ago.
Ok and no term or repayment time etc?
Customer: replied 1 year ago.
No, Please see the details of the loan in my question put to you.
Expert:  Ash replied 1 year ago.
The promissory note, yes I saw that.
If there was no repayment date, on what basis are you seeking repayment though?
Customer: replied 1 year ago.
This is the paragraph from my question!........ The marriage has come to an end!A solicitor drew up a ‘Promissory Note’ signed by all four parties. In the note there is no mention of a repayment schedule other than to say that the lenders may call for immediate repayment of the principle sum within 28 days should the marriage end on a permanent basis. On a private verbal agreement they were to pay £500 per month to pay off the debt.
Expert:  Ash replied 1 year ago.
Yes I see, I read they had separated.
1 Could I take out a CCJ against him with a charge on the joint property or would the fact that it is a joint mortgage be a problem? I understand the mortgage co. would be paid first then my daughter as the second name on the mortgage then what is left would come to me, but which would still not be enough to repay the debt. Could I still then look for the outstanding to be repaid?
You can get a charge if the debtor consents. If the debtor does not consent then you need to issue County court proceedings.
2 Would he be allowed to declare himself bankrupt, as although he could say he has no money he still has equity in the house.
Yes. You can't stop someone declaring themselves bankrupt. The threshold is very low.
3 If he did declare himself bankrupt could I still have a charge on his property, or even get a charge to make him sell it?
No, it would then be transferred to the Official Receiver who will take control and sell the asset. You are then an unsecured creditor and in the pot with everyone else.
4 What other course of action could he take to make life difficult for us and get out of repaying his debt.
You need to make it secure. So you are better off getting a CCJ then once you get that you can secure the debt which means if he is bankrupt then the debt is secure.
Can I clarify anything for you about this today please?
Alex
Customer: replied 1 year ago.
It is only a thought that he may go for bankruptcy, he might just say he cant afford to pay or offer £2 a week or something silly, so would it not be better to go for the CCJ and a charge at the same time, which I understand I can now do due to recent changes on CCJ's and charges. If I do want to ask for a charge could you have another look at my first question and give me a bit more detail on your answer regarding the mortgage situation.
Expert:  Ash replied 1 year ago.
If he is bankrupt the OR takes charge of all assets to sell. But there is a high cost issuing proceedings and the Official Receiver deposit.
As for a charge on property it makes no difference who else is on the deeds or mortgage. You are charging HIS share of the property.
Does that help?
Alex
Customer: replied 1 year ago.
Yes thank you that will do.
Expert:  Ash replied 1 year ago.
Good luck with this.
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Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience: Solicitor with 5+ years experience
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