01
IT IS AN ASSET OF THE COMPANY
An overdrawn loan account is treated as money owed to the Company, and the Liquidator has a duty to pursue it.
Ignoring the demand does not make it go away, and it removes your options.
This one has to be dealt with.
THE LIQUIDATOR SAYSI OWE THE COMPANYMONEY. WHAT NOW?
An overdrawn Director's loan account is a real debt.
But a demand is the start of a conversation, not the end of one.
The Liquidator's job is to recover value for creditors. In most cases that means reaching a workable arrangement with you, not pursuing expensive litigation. Knowing that changes how you approach it.
Engage early. It is where the flexibility is.
4 THINGS EVERY DIRECTOR SHOULD UNDERSTAND
02
MOST OVERDRAWN DLA ACCOUNTS ARE SUBJECT TO NEGOTIATION
Liquidators generally prefer a negotiated outcome to costly legal action.
Instalment arrangements are common, and a reduced lump sum in full and final settlement is sometimes accepted.
There is usually more room than Directors expect.
03
IT CAN SOMETIMES BE CHALLENGED
Not every balance labelled a loan actually is one.
Properly declared salary or dividends, or genuine business expenses, may be treated differently. The paperwork determines this, not the label in the accounts.
Worth checking before you agree anything.
04
BE STRAIGHT ABOUT YOUR POSITION
Any settlement must be based on a true and complete picture of your finances.
A deal reached on an inaccurate position can be set aside later, leaving you worse off than before.
Honesty here protects you, not just them.
A DEMAND IS NOT A JUDGMENT.
How you respond in the first few weeks shapes what this costs you — and what options remain open afterwards.
I CAN'T POSSIBLY PAY WHAT THEY'RE ASKING FOR.
Say so, properly. Liquidators deal with Directors who cannot pay in full every week of the year.
What they need is a realistic picture, not a perfect one.
What matters is that you engage with evidence rather than going quiet.
5 THINGS TO AVOIDDOING WITHOUT ADVICE
- 1
Don't ignore the correspondence
Silence results in any claim being pursued by legal action.
- 2
Don't agree a figure you can't pay
A broken settlement is harder to recover from.
- 3
Don't understate your position
Settlements built on inaccurate information can be reversed.
- 4
Don't assume the figure is correct
Loan account balances are frequently wrong.
- 5
Don't deal with it in isolation
If you have guarantees too, they should be handled together.
HOW WE CAN HELP YOUUNDERSTAND YOUR POSITION
- Whether the balance claimed is actually right
- Whether any of it can properly be challenged
- What a realistic settlement might look like
- How instalment arrangements usually work
- What to disclose, and how
- Whether this should be dealt with alongside other debts
- What happens if agreement cannot be reached
- What you should – and shouldn't – do next
SPEAK TO US FIRST.
A confidential discussion today could help protect you tomorrow.
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