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F E Smith
F E Smith, Solicitor
Category: Bankruptcy Law
Satisfied Customers: 11259
Experience:  30 years in general practice.
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Following the liquidation of my company in October 2017, the

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Following the liquidation of my company in October 2017, the liquidator has found that there was an overdrawn Director's Loan Account of £37,273.54. I cannot dispute this, despite having amounted considerable personal debt during the period before the liquidation in order to pay my personal bills.The liquidator has since stated they are willing to accept a sum of £16,000 as full and final settlement within 'a short time frame'.I do not have any personal savings and my only asset is my property so I am concerned that this is at risk. Should I accept the offer of £16,000 and try to make arrangements for repayment, or is there any alternative option available to me?Thank you.

Hello - what sort of alternative option would you be looking for if possible?

Customer: replied 6 months ago.
Hello. I would be looking to minimise the amount payable. Having started to build a new business following the liquidation of the old one last year I am still in a fragile financial position.

What the liquidator is saying is that you took all this money out of the company treating yourself in preference to other creditors and now he wants the money back. Your own financial situation is not relevant.

I have come across this situation before where the main creditor was the Inland Revenue and purely by coincidence, the amount being reclaimed by the revenue was £16,000. The director had spent all the money and didn't have it and was made bankrupt. This is not to be ta***** *****ghtly.

Of course, the liquidator would have to take you to court and prove to the satisfaction of the court that you had treated yourself in preference to other creditors and potentially you could be on the hook to pay the whole amount back, and in the Liquidator has said that he would accept £16,000, it's something that you really need to try to raise.

If you don't have a house with any equity, then probably the worst that can happen is that you were made bankrupt. That may or may not bother you. However if you have equity in the house, it would mean that you are likely to lose the house.

Whether the liquidator will negotiate further in this respect will depend on your ability to raise the amount of money and whether you have a house that in the event of bankruptcy would have enough equity to pay a large chunk of money. If you could, for example, raise £12,000, but not £16,000, then provided you have proof of that, the liquidator is more likely to accept it than have the trouble of going to court.

You might want to see a solicitor who has experience of dealing with insolvency or an insolvency practitioner because the offer is going to be better coming from one of those professionals than directly from you.

Can I clarify anything else for you?

I’m happy to answer any specific points arising from this.

Please take a moment to look at the top right hand corner of the page and rate my service by clicking one of the stars at the top of the screen. It’s important you use the rating service because that gives me credit. It doesn’t just give me a pat on the head! (Although there is an incentive scheme where the more five-star ratings I get, I do actually get a pat on the head! :-)) All you need to do is press Submit. Thank you.

If you still need any point clarifying, I will still reply because the thread does not close.

Best wishes.

FES.

Customer: replied 6 months ago.
Thank you - that is of help to me. I think that satisfies everything for the moment but I may need to refer back in a day or so if it raises any further questions.

I am glad to help.

Before you go (you can come back at any time), please don’t forget to use the rating service because that gives me credit. It doesn’t just give me a pat on the head! The thread remains open. We can still exchange emails.

Kind regards.

FES

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