not sure if this is an aibu or accountacy question - repayment of loan

[floweredwallpaper]

Let me start by saying that I am meeting up with an accountant about this next week, so am taking real life advice. I just want some opinions / facts before then!

I'm a director of a limited company which has been operating at a loss. I've put quite a bit of money into it over the past year and a bit, expecting to get it back when we started earning something. Now that we are in a position for me to begin getting the money repaid, one of the directors who has no money owed wants to get paid at least some of the money we've billed for her time. In her words "I don't want to work for floweredwallpaper for the next 5 years" - ie, she doesn't want her billable time to go towards paying my loan back to me.

So. Where do I stand on this? I'd really like to get my money back and think it should come before us drawing salaries / getting paid. The accountancy side is an absolute mess, we were left by the guy who had been doing our accounts and didn't realise how much hadn't been done.

There's more - I don't want to drip feed but I really don't want to rant and rave, so thought I'd start with that. I've changed my name just in case, too.

(Apologies - I posted this first in employment but think this is a better place to catch accountants... I've just re-read and it doesn't sound desperate but, trust me, I'm feeling a bit desperate about the whole accountancy thing.)

Don't feel desperate, you just need to find the right business partner to work with that isn't going to leave you in the lurch.

Do need a bit more information though: you say you are a director of the company, I assume you are also a shareholder? Is the other director who has done work for the company also a shareholder? Is anyone else? Have they made loans to the company? What arrangements were made for compensating the other director for their work i.e. if the company is billing £x per day, how much would the director be paid?

You have put in hard cash, she has put in 'sweat equity' (and so presumably have you). Before any of this happened, you should have agreed how those investments would be repaid as it is much harder to see things from someone elses point of view when you are out of pocket. But now you are where you are, so you need to come to a way of sorting it out without adversely affecting your relationship going forward.

Yes, I am shareholder with a 30% stake. She has 20% and there are two other shareholders with 20% and 30%. One of those is also a director- so 3 directors, 4 shareholders.

The three of us have all been working. The one in question went AWOL for a few months and has just picked up working on a regular basis again. I spend more time than her working on the company during any given week even now. The other director works like a madwoman.

Any expenses she's had, we've reimbursed immediately as she can't afford to be out of pocket. I have said repeatedly that I'd like to get paid back and thought this was understood. There's no formal agreement in place.

I'm throwing in the towel, there are other issues as well, such as no one else taking the business / money side seriously. What do people normally do? Will an accountant help? Are you my accountant (you will recognize this if so!)

The guy I spoke to said that he would have done some things differently and made sure we all understood what we were getting into. For various reasons we didn't but, of course, not much I can do about it now.

Thanks. :)

Oh and aibu in wanting to make repaying me a priority? Her view is that she didn't really want to spend the money so doesn't want to pay it back. It was not a unilateral decision by any means, we all discussed it.

I've namechanged to avoid being searchable btw - I think I was subconsciously channeling flowerybeanbag's name when I chose this one. I looked at my "threads I'm on" and thought she had answered my thread.

Not been a good week.

Wow, what a mess.

It doesn't really matter what I think, because as a minority board member and a minority shareholder it is what the others think that counts. They are only going to give you your money back if you can persuade them that you are being reasonable, and as I say the main factor from their point of view (if they are acting fairly, which they might not be) is how they measure your cash and efforts against their own. Of course this applies in the same way to the other person - you are both in the hands of the majority.

As to how you stand if you DEMAND your money back, this depends on how everyone perceived the terms of the loan. You could well claim that the loan was to be repaid on demand, they may well say that it was always understood that noone would be paid anything until the company was in profit. Lawyers could make a fortune arguing about this.

As to what do people normally do, well about 75% of them probably do what you have all done and it ends up in a mess. About 25% of these probably spend more money with lawyers that the company would ever have been worth sorting it all out. The remaining 25% get a shareholders agreement in place at the start that makes sure that all the shareholders are agreed about things like borrowing money and particularly repaying loans, when a director does work for the company what the terms are going to be and when they are going to be paid, and what happens when someone wants out. This does mean expense up front, but the expense of getting a shareholders agreement drawn up is a fraction of the amount it costs to settle a dispute, and a tiny fraction of the amount it costs to go to court.

I don't think an accountant can help technically - there aren't really any technical aspects to this - but someone who has a lot of experience of this kind of thing can potentially act as a guide to help you all sort it out. Some people who are good at this sort of thing are accountants, some are lawyers and some have other backgrounds (I know some good people with an HR background - this is a people issue, not a technical one). They would have to be accepted as a fair mediator by all parties though.

I think I was subconsciously channeling flowerybeanbag's name when I chose this one
I did wonder

Just to clear up the technical aspecs, by doing work for the company the other director may have effectively made a financial loan to the company which ranks equally to the cash loan you have made. Whether this is the case would depend on the facts, in particular (in the absence of a written agreement) what the other director acting as themselves thought was going to happen, and what the board acting as a group (or possibly the shareholders acting as a group) thought.

That is amazingly helpful, thank you! I really appreciate it. From what you've said (and some that I haven't), I'm in a good position to reasonably ask either for my money back or to be paid a fair amount. Which is ok; I've done work in exchange for rent and also for our company (both of these can be quantified). I do all the IT aspects (site etc) and, actually, everything other than what we actually sell ourselves doing (I do a bit of that too). I freelance doing websites and other stuff like that so can put a number on some of what I've contributed.

The other director (the one who works like a madwoman) is an extremely good egg, so anything decided will be fair. I figure in situations like this, the best to hope for is everyone equally unhappy. I'm ok with that!

And if flowerybeanbag is reading this, I'm sorry! I won't use this name again. It's just that I have mn set up to show my posts in a weird green colour and I will get confused / more confused if I change on this thread. Although maybe that would still work even if I changed? But then if MrAnchovy had his set up to show the OP in a colour, his wouldn't. That one gets me sometimes on other threads.

Thanks again. I'm at seriously high emotions this week - just pulled my 10year old out of his old primary school and into a new one. It was the right decision - should've done it years ago - but high stress. I really appreciate the objective advice right now. :)