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Alex J.
Alex J., Litigator
Category: UK Law
Satisfied Customers: 2536
Experience:  LLB, LPC, DELF
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Hi I am part of a company with five directors where one of

Resolved Question:

Hi I am part of a company with five directors where one of the directors filed for bankruptcy in April, didn't tell the company and it came to light in the middle og May when the bank froze our account and a utility direct debit was returned. The bank told us to contact the bankrupts' OR and remove him as a director.
This we did but on contacting his OR we discovered that he had made no mention in his interview of his involvement in the company. We then had to pass on details of his involvement, he, as are all directors owed a 55K directors loan, he also has a 1/5 share in the company. Due to this information his OR then appointed an IP wha has now contacted us for information. Where do we stand on the following;
1) The directors loan of 55K, although it does say in our accounts that directors loans are repayable when funds become available, we are currently holding about 28K in our bank account and also assets ( property) of about £400,000.
2) On the revelation of his bankruptcy, the director stated that he had transferred his share to his mother in June 2012, he had not informed our company, we have not been given an instrument of transfer or old share certificate and therefore he is still listed as a shareholder at companies house.

Thanks in advance.
Submitted: 1 year ago.
Category: UK Law
Expert:  Alex J. replied 1 year ago.
Hi

Thank you for your question and welcome to Just Answer.

Are you concerned the trustee in bankruptcy will demand the directors loan is repaid?

Do your articles of association or shareholders agreement (if you have one) have restrictions on transferring shares?

Kind regards

AJ
Customer: replied 1 year ago.

Hi our articles are model articles, we were formed in 2010 so am assuming 2006 apply. We have a draft unsigned directors agreement. We did have a board meeting where the agreement was discussed and items within approved including pre emption clause. Also, the automatic loss of directorship on transfer/ sale of share. The director involved had discussed a possible sale as he was going through a divorce and did offer his share to the company for £90,000, this wasn;t achievable or acceptable by the company, the transfer value on the yransfer form was £7500.


 


Thanks

Customer: replied 1 year ago.

Hi our articles are model articles, we were formed in 2010 so am assuming 2006 apply. We have a draft unsigned directors agreement. We did have a board meeting where the agreement was discussed and items within approved including pre emption clause. Also, the automatic loss of directorship on transfer/ sale of share. The director involved had discussed a possible sale as he was going through a divorce and did offer his share to the company for £90,000, this wasnt achievable or acceptable by the company, the transfer value on the transfer form was £7500. Yes our main concerns are demand for repayment and also whether or not the trustee will disregard the transfer, it was also initiated 10 months before filing and wasn't included in his original declaration yo the OR.


 


Thanks


 


Thanks

Expert:  Alex J. replied 1 year ago.
Hi

Thank you.

Did you have formal directors loan agreements? Or did the directors agreements detail the repayment terms?

Kind regards

AJ
Customer: replied 1 year ago.

No, in the accounts it is down as being repaid when funds become available.

Expert:  Alex J. replied 1 year ago.
Hi,

Thank you.

Do you have anything that confirms in writing or implies that there is no obligation on the company to repay the debts until funds are available? Are you saying the loans are only repayable when there is enough to repay all of them? or just one at a time?

It may be possible that if you show there is no actual obligation to repay the company immediately you can settle with the trustee for a lower payment sum if it is to be repaid immediately.

Kind regards

AJ
Customer: replied 1 year ago.

Thanks, XXXXX XXXXX was no fixed repayment schedule, we all accepted that we would get repaid on the possible sale of land when planning was achieved so, if we are forced into repayment we will have difficulties. We also feel it is unfair that it is not our fault that the director is in his predicament. I have suggested that, because we have been told that one option for the liquidator would be to liquidate us, that we put individual charges on our assets to protect each directors loan which are currently unsecured, is this an option you would reccomend? Also, where do I rate your answer.


 


Thanks


 


Jeremy

Expert:  Alex J. replied 1 year ago.
Hi,

Thank you.

Firstly, you need to provide the trustee with evidence to show that the loan is not repayable until the land is sold. This may stop the trustee from pursuing the company directly.

Secondly, the trustee could push for judgment against your company, however they would have to prove that the loan is due and owing to the bankrupts estate.

What you are suggesting is possible. You could all take charges over the piece of land being sold and offer the same to the trustee. That would protect all of you and the company and stop the trustee gaining priority over your loans.

I would still recommend that if you can you agree to buy the trustee off at a lower rate. They will be desperate to get their money quickly and this could be a good opportunity to pay the loan off at a lower amount.

I look forward to hearing from you.

Kind regards

AJ
Alex J., Litigator
Category: UK Law
Satisfied Customers: 2536
Experience: LLB, LPC, DELF
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