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Help withlimited liability company bancruptcy please(7 Posts)
My partners company is about to go bancrupt, owing £100.000. I had no idea things were this bad for him. We both put all our savings into the company to rescue it a few years ago, and so of course we have lost that- I have no connection to the company legally, I just lent the company money. All we have is our house, in joint names with £200,000 of equity. I am so worried that his creditors will chase him personally in some way and force us to sell the house. He personally guarenteed his company bank overdraft, and used a personal credit card for company expenses which is why i am worried- does the fact that he did this imply in some way that he is personally responsible? I am thinking of remortgaging the house in my name only, which is possible, but I would have start again with a 23 year mortgage when we only have 10 years left on our current one. There are 2 other share holders, but they are sleeping partners. If anyone can advise me I would be so grateful. Thanks.
My partner has offered some very tentative and vague guidance.
First of all he said it is a complicated matter because it depends how the company is limited. The main thing thats important is the linkage between the company and his personal guarantee etc. He said that it is entirely possible that creditors will use your house as a way to recover the debt, but again this depends on the nature of the personal guarantee. He also said that with bankruptcy, creditors can reverse any asset transfers within the last 5 years so remortgaging in your name would likely be pointless. Independent legal advice would clarify this though as he said that he couldn't be sure without knowing the ins and outs etc.
He suggested contacting Business Debt Line here and also getting some legal help.
Sorry, I'm not sure that's very helpful but didn't want your post to go unanswered. Good luck.
Well yes I would assume they'll chase him personally, who else should they chase (as well as the 2 sleeping partners?). If he's about to be made bankrupt it's probably too late to transfer the house into just your name.
He needs to take advice on behalf of the company. I suggest you find a local accounting firm that does insolvency work and see if they will give a half hour free initial discussion.
If he has given the bank a personal guarantee then I am afraid your house could be on the line, but other creditors would normally have no claim on his personal assets. It is vital that the company takes professional advice now to work out what to do and that you don't do anything like transferring property to you without taking professional advice as it is unlikely to achieve what you want it to and could easily make the situation much worse.
Unfortunately I don't think that the Business Debt Line can help with company insolvency as they are a charity set up to deal with personal debt problems, but th may refer you to someone who can so worth giving them a call.
Thank you for the constructive advice. I am thinking of getting a personal loan to pay off the bank overdraft which he has guaranteed, as it is only 30k. Luckily I have no debts personally so I would get one I think. Is this a good idea do you think/? Thanks
I'm sorry that you're both in this situation.
A company is financial distress (can't pay it's bills) is insolvent, not bankrupt. It sounds like a members voluntary liquidation is the way forward and I second the advice for approaching an insolvency practitioner now, before creditors put steps in place for creditors insolvency proceedings to start.
Anything he has personally guaranteed he will have to pay, but if he has paid company debts then he is a creditor just as you are because you have loaned money too. You have the right like other creditors to make a claim for repayment of your loan.
If there is evidence that your Dh has misappropriated funds or assets from if business then creditors can request that an order is made for him to repay funds into the company to be distributed. This is very rare in my experience.
Get advice asap.
*I'm not an Insolvency Practitioner, I've just worked alongside then in a professional context.
"Is this a good idea do you think?"
Definately not without appropriate advice looking at the big picture.
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