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Max Lowry
Max Lowry, Advocate
Category: UK Law
Satisfied Customers: 1402
Experience:  LLB, 10 years post qualification experience
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I owe money to a dissolved company who lent me the money in

Customer Question

I owe money to a dissolved company who lent me the money in 2004 but were dissolved in 2006. Is the former majority shareholder of that company acting illegally by asking me to repay that debt to them personally?
Submitted: 3 years ago.
Category: UK Law
Expert:  Jo C. replied 3 years ago.

Hi

Thank you for your question. I will try to help with this.

 

Why do you think you should not pay this money back?

 

 

 

 

 

 

 

 

Customer: replied 3 years ago.

There is no doubting the fact that the money is owed BUT not to this person but a dissolved company. For over two months, in response to the claim for the money to be repaid, I have repeatedly asked for a copy of the loan agreement and all other documentation and they have not been forthcoming. It is my considered opinion that this person knows it is unenforceable and so I wish to use the law to refuse to pay this debt because it is not owed to that person personally... if of course it is the law!

Expert:  Jo C. replied 3 years ago.
Sorry, I see what you mean.

Thats not my area. I'll opt out for others.
Expert:  Max Lowry replied 3 years ago.
Hi, welcome to Just Answer. I will help you with your question. This does sound a bit sneaky. Do you recall the agreement being with the company rather than the individual personally? Do you recall whether the company went into some kind of insolvency? Max
Customer: replied 3 years ago.

 

Hi Max... I have in my possession documents which are irrefutable proof that the money was lent to me by the company and not the individual even though I am positive there was never a signed loan agreement, hence the reason why I have not received a copy despite repeated requests. I am also confident that it would be unenforceable because of the six year statute of limitations rules as no repayments have ever been made and it is some 7 years since the loan was actually provided. I therefore feel I have two lines of defence but want to use the fact that the money is owed to the company and not this person as the main reason for refusal to pay. I have approached Just Answer to establish whether in your opinion this person is acting illegally.

Expert:  Max Lowry replied 3 years ago.
Couple more questions. Was the loan a personal guarantee and if it was was it by deed? Was there a specific time which the money had to be repaid?
Customer: replied 3 years ago.

For Max... If you mean was the money lent to me with a personal guarantee given to the company by way of a deed signed by this person then I am not aware of it being the case but then surely I would not have been party to that information as it would have been an internal matter for the company. No repayment plan was set up. It was an advance against future earnings and so would have been depleted as and when these occasions occurred. Within a year my business was closed and so unable to repay the debt on that basis and the following year this company was dissolved. The lack of a legally binding loan agreement does of course not help this person's case either as proof of who the loan was made by and on what terms. There is more to the circumstances surrounding this loan but none that I feel are relevant to the core issue which is does this person have the legal right to claim repayment of the money from me.

Expert:  Max Lowry replied 3 years ago.
Thanks. Based on what you have said the debt belongs to the company. It is no longer in existence and therefore the debt no longer exists. Also, it appears the debt is over 6 years old therefore it is statute barred and cannot be pursued. It is certainly questionable if he can't produce evidence of the debt in the form of the agreement. It sounds like he's trying this on. If you haven't already done so, write to him in no uncertain terms setting this out. Tell him you will defend any spurious action he takes and you will seek an order for costs against him. Keep copies of all correspondence with him in case you need to produce it to court if he commences proceedings.
Customer: replied 3 years ago.

Thank you very much for confirming what I had thought was the case. One final question, I understand that because the company was dissolved and not made insolvent then the company could be resurrected. Whilst this may be a perfectly legal way to secure repayment of the debt I would have thought it would be unwise due to the costs of setting up the company again, etc. Do you agree that [1] this is possible and [2] would be financially unwise given that the debt is only £2747? Mind you I suppose if this did happen then I would be able to fight it on the fact that its statute barred.

Expert:  Max Lowry replied 3 years ago.
It would be possible to apply to restore the company. It must be done within 6 years of the dissolution. If restored it would be possible for the company to pursue the debt but it has to overcome the hurdle of showing the debt is not statute barred. It would certainly appear to be uneconomical to restore the debt for this sum of money. It costs in the region of £ 900 in legal fees.
Max Lowry, Advocate
Category: UK Law
Satisfied Customers: 1402
Experience: LLB, 10 years post qualification experience
Max Lowry and 2 other UK Law Specialists are ready to help you
Customer: replied 3 years ago.
Thank you Max... I hadn't realised there was a time limit on resurrecting a dissolved company. Six years would mean March 2013. I am also assuming that the £900 is the cost that Companies House would make and there would also be legal and accountancy costs to consider as well. I have just checked on CH website and it was a Voluntary Creditors Liquidation which I'm assuming means that they voluntarily wound the company up but told their creditors that the company did not have the funds to settle their debts. If that was the case then there would be a danger in resurrecting the company that those creditors would want a cut of the amount recovered from me and would be none to happy about the antics of this former shareholder? Is that thinking correct? Promise this is the last question!
Expert:  Max Lowry replied 3 years ago.
Could you please tell me why the liquidator did not try to recover this debt from you if it was owed to the company?

I am happy to continue to assist you but I should be grateful if you would please press accept. I will be credited for my time in answering your questions and I will leave the question open in order for me to provide my answer once you confirm the above. Max
Customer: replied 3 years ago.

For Max... I do apologise I will press accept in future. It was not until digging out my old files recently that I remembered the loan had been made by this company and why I looked into it much deeper (ie. Companies House) and discovered that it had been dissolved. I have no idea why I was not approached by the liquidator. One can only assume that as this person knew I had no money to repay the debt (which was the truth at that time 2004/2005) the liquidator was told this and for that reason decided there was no point in contacting me!

Expert:  Max Lowry replied 3 years ago.
Ok. This does make a difference. If this company were to be restored it would go back to the position it was in prior to dissolution i.e liquidation. Therefore, any money collected in would be for the benefit of all the creditors. It would appear that restoration looks unlikely. Max
Customer: replied 3 years ago.

For Max... I think my strategy now will be to wait for the reply to my letter sent last week which yet again requested a copy of the loan agreement. If the reply is still a demand for the money then I will write a letter based on your advice. If this does not work then it will be interesting to see what happens next. Either way I am now extremely confident that this debt will never be repaid. I thank you for your advice and will come back to you if the circumstances are such that I need to take this further.

Expert:  Max Lowry replied 3 years ago.
No problem. Good luck. Max

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