Directors Loan Account Reduce / Write off
Directors Loan account in an Insolvency / liquidation / winding up petition
In an insolvency situation if the directors are overdrawn by means of a directors loans (in other words the directors owe money to the company) then that money will be demanded by the liquidator appointed for the company.
I am sorry to say I have come across a large number of insolvency practitioners over my life working in the insolvency and business turnaround sector who do not point out to the directors the loan accounts and that they will personally become liable to pay the sums back. All I can put it down to is shear greed to get the client signed up knowing full well there is a directors loan outstanding but say nothing till a few months down the road and then start demanding the money back or further litigation to recover from the directors.
If I have seen this once or twice I would be more than happy to say they made a mistake and overlooked the fact to mention it to the directors that they will want the loan account paid back. But I have seen it with small insolvency practitioners and the bigger practices as well. So sad when greed becomes the key factor.
There are a number of ways that the amount can be reduced well before the liquidation takes place and even during the liquidation also, there are ways to lower the amounts paid back. But what the liquidator will tell you that I am duty bound to collect the loan account in the interest of the creditors. What he is saying is I need that money in my account so I can run my bill up.
Over the years I have helped to reduce and even eliminate the directors loan accounts by way of understanding how the system works and the greed factors for the practitioners as well as other creditors.
If you owe money to your company and you are considering insolvency as an option, do not go to the insolvency practitioner until you know all the facts of the power he has and what works in your favour to reduce or eliminate the loan.
If you need professional help and advice to save you from the directors loan account, then give me a call on 0800 24 0800 and leave me a message with a brief description of the problems you are facing and the best time to call you back for private and confidential chat to see how we can assist you.