How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask F E Smith Your Own Question
F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 15591
Experience:  I have been practising for 30 years.
Type Your Law Question Here...
F E Smith is online now

I am currently a director within a company and looking at

Customer Question

Hi,I am currently a director within a company and looking at resigning due to personal reasons.The business has two other directors.
I have loaned the business £16000. There was no loan agreement in place.
I am also a personal garauntee for a few leased items.
The business is not in a position to repay the loan without going insolvent or liquidation (Even for half that would be willing to write off)I’d like to resign ASAP if possible but I’d like to know what the process and best solution would be to repay the loan and avoid liquidation of the business, otherwise I’d still be personally liable for repayment of the assets.
Submitted: 6 months ago.
Category: Law
Expert:  F E Smith replied 6 months ago.

Good morning. I will assist with your question - be aware this is an email not chat service therefore i maybe delayed in replying.

for background -

what is the business

what was the loan for?

why no agreement?

what are the leased items? why were you guarantor?

Customer: replied 6 months ago.
Good morning! The nature of the business is a barbershop and the loan was used for fixtures and fittings of the store. Agreement was not put in place due to negligence and hence another reason I’m leaving. The leased items include the barbers chairs and the building. All three appointed directors had to be placed as guarantors to proceed with the leases.
Expert:  F E Smith replied 6 months ago.

You cannot be compelled to remain a director and if you wish to resign, you are quite at liberty to do so.

If you have shares in the business, then you can sell your shares or keep them as you wish.

You say that you loaned the business 16,000 pounds.

The business is indebted to you for that 16,000 pounds assuming that it was not the purchase price for the shares in which case you have shares and you are not entitled to the money back unless they want to buy the shares from you.

In respect of your personal guarantee for the leased items, you obviously remain liable for that if the limited company doesn’t pay.

You cannot get blood out of a stone in the worst scenario is that if you press for the 16,000 pounds, the remaining directors liquidate the company, you get nothing, and the landlord and the lease companies foreclose and you are all personally liable.