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Ed Turner
Ed Turner,
Category: Bankruptcy Law
Satisfied Customers: 1917
Experience:  Director and Consultant Solicitor (Self-Employed) at Ed Turner LLB Limited
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Need some advise prior to a call with my bank. In short I am

Customer Question

Good evening - need some advise prior to a call with my bank. In short I am 51yr old male, retired (early redundancy with access to small company pension) and a few yrs back set up a Ltd company offering social work related services supported by a bounce back loan of £24k. Roll forward, zero turn around, funds whittled to zero and companies house dissolved the company. I am not trading at all nor have intention to do so following the impact of Covid, however I have an account with HSBC for the Ltd company with 3 months in arrears. My question is how to address the bank and how to come to some agreement re the £24k as I am in no position to settle in full nor maintain the large monthly payments given my pension income barely covers my living.
Submitted: 17 days ago.
Category: Bankruptcy Law
Expert:  Virtual-mod replied 17 days ago.
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Customer: replied 17 days ago.
Hi - grateful if you could continue to find someone who could advise options re my question - thanks you
Expert:  Ed Turner replied 17 days ago.

Hello.   I am Ed, a Solicitor qualified in England & Wales with over a decade’s experience in the legal profession advising clients.

I specialise in Commercial Contracts, Business Transactions, Employment, Dispute Resolution, Personal Injury and Road Traffic Law and shall be reviewing your legal problem today.

Regarding the site’s automatic offer of a Premium Service Phone Call, I shall be delighted to talk with you by phone to discuss your issue in greater detail if you accept the offer.

However, if you do not want a phone call, please cancel the offer for a Premium Service Phone Call and you will not be charged extra.

Expert:  Ed Turner replied 17 days ago.

It appears that your former company's bank is pursuing your for your overdrawn Director’s Loan Account (“DLA”).

A DLA allows a company director to take money from their limited company in a way other than a salary, dividend, or expense.   Any transactions must be clearly recorded, and if you take out more money than you put in, the DLA will be overdrawn, and the director personally will owe their limited company this amount.   If the figure is kept below £10,000, having an overdrawn DLA is not usually an issue.   However, if the company becomes insolvent, the situation becomes much more complicated.

When a limited company goes into insolvent liquidation, the liquidators will consider an overdrawn DLA to be an asset of the company.   Therefore, the director must pay back the money they have borrowed from the company so that the money can be used to repay the company’s creditors.  Unfortunately, directors of insolvent companies are usually financially unable to do this at a time when their company is going into liquidation.

It appears that the company’s liquidators have instructed their solicitors to pursue you personally for your overdrawn DLA so any money that they receive from you may be used to pay your former company’s creditors, including HMRC.

If the company’s liquidators have issued you with a Statutory Demand, then you have 21 days to apply to Court to set it aside, pay the debt in full or make reasonable proposals for settlement of the debt by instalments and/or in part.   Failing this, the liquidators may petition for your personal bankruptcy so that your assets (such as your house and your car) may be sold to pay the debts of your former company.

The rules surrounding overdrawn DLAs when a company becomes insolvent are extremely complex, as are corporate insolvency, personal bankruptcy, and civil litigation generally.   I recommend that you seek professional advice as soon as possible.

Expert:  Ed Turner replied 17 days ago.

I hope this resolves your enquiry.   Please revert to me if you require any clarification of my answer to your question and I shall be delighted to assist.

Kind regards

LawyerEd