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Old 06-15-2011, 10:09 AM
advxc153 advxc153 is offline
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Default Effect of insolvency on family debtors
I have a client who has extensive property investments, and is facing possible insolvency. He previously lent approximately ?40000 to his son for investment in a company his son had set up. His son is sole director, and the investment by his son in the company was shown in the directors loan account. This company is debt free, has no employees but is still trading, although no longer profitably, but it does own some plant and equipment (valued at approximately ?30000). His son has no personal assets.

If my client declares himself bankrupt, what will happen regarding this loan? Will the administrator demand repayment, so bankrupting his son as well?

If the loan has been directly to the company, could the administrator demand repayment from the company, as it has some assets?

Any advice appreciated.
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