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JimLawyer, Senior Associate
Category: UK Law
Satisfied Customers: 80
Experience:  Senior Associate Solicitor and Litigator
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I am the joint director of a small limited liability

Customer Question

I am the joint director of a small limited liability company. In 2012 A private investor loaned us £25000 to purchase stock. We agreed an interest of 15% per annum. There was no time set for repayment of the capital only an understanding that it would be repaid in the future and by my understanding when the business was sold. There was no written contract. The cheque was paid in to the company account. The interest has been paid regularly from the same account. The interest was reduced to 11% in 2015 by mutual agreement. The investor is now demanding some of the capital back and within a further short time frame all of the balance. He is also suggesting that if the company does not comply I and my co director are personally liable. My questions are; must we pay on demand rather than when suits us? Are we personally liable?
Submitted: 5 months ago.
Category: UK Law
Expert:  JimLawyer replied 5 months ago.

ty and Hello, thanks for the question. With limited liability status, it is the company which has the debt and is only liable for the amount the directors have paid up in capital. There should have been an express term for when the funds were to be repaid. If no express term then he could argue an implied term of a reasonable period of time but what is 'reasonable' depends on the facts and how much was owed, what his expectations were and so on. If he insists pursuing the matter, he could sue in the county court for the sum plus interest. if he succeeded he would then have a county court judgment against the company (not you as director). I would try and agree terms for when the sum is repaid. If you can't then invite them to issue proceedings and you can ask the court for an order for repayment terms. I'd try avoid court action though and see if he will agree something less formal.