Handling of Shareholder`s Loans when Shareholder Files Personal Bankruptcy
April 29th, 2008 by Questions
I ran into financial difficulties and I am considering filing bankruptcy. I own 50% of the shares of a LTD company, and I have loaned $50,000 to the company a year ago. I know once I file personal bankruptcy, the trustee will demand the company to repay the $50,000 because that is my asset, and the money will go to the trustee. Since I own 50% of the company, that means I have to be responsible for 50% of the loan. However, I am already bankrupt, how could I repay 50% of the loan? I don`t understand how that works? Could you provide me with some advice?
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April 30, 2008 at 9:09 am, Barton Goth GCO Bankruptcy Trustees said:
Well first off it technically wouldn’t be you that would owe the estate, it would be the limited company. So if there is money in the limited company it would come from there.
Secondly, if you loand the company $50,000, the company is responsible to pay the full $50,000. This isn’t one particular director it is both directors. So you and your partner will each be 100% responsible that the $50,000 is repaid.
Now practically speakng, if there isn’t any money in the limited company then the trustee has to decide what is the best avenue to attempt to collect this money. They may have to sue the company, obtain a judgement and wait until there is some money that comes into the company, or potentially if there are any assets in the company they may register a lien on those assets. Alternatively, the trustee may find that there is absolutely no likelihood of being able to collect this money from the company. It really depends on what type of company it is, so I recomend you contact a local trustee as more details surrounding this situaiton will be necessary to provide the detailed explanation you will need.