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Topic:
Company loans and soft loans (7 Posts)
Started By:
Date:
30 January, 2018 11:02AM
Company loans and soft loans
beenans - 30 January, 2018 11:02AM
I own a minority shareholding in a family business in the North East and am a Company Director have a loan from the company of around £30k. All these payments are recorded and will be in the end of year accounts.

I need to pay the £20k legal fees I have incurred

If I get another £20k loan from the business to pay my legal fees will the court view this as a soft or a hard loan

The other side claims it is a soft loan (as i part-own the company) and I claim it is a hard loan and the legal advice I have so far is that it is difficult to predict what the court will say which isnt very helpful
Re: Company loans and soft loans
davidterry - 30 January, 2018 12:23PM
If you can get the borrowing from the company easily enough then I assume in due course you will also be able to persuade the company to write it off and/or repay it on favourable terms. If that is the case it is a soft loan.
Re: Company loans and soft loans
beenans - 30 January, 2018 04:49PM
Thanks for the response. As my only assests are my shares and the equity in the house, she is likely to get the equity in the house and I keep my shares. As I cannot finance my legal fees any other way will the loans i take out for legal fees also then be considered soft loans?

The issue will be I will have shares I cannot sell (I only have 15%) and then will have £50k debts the court considers soft loans, though I will have to pay them back.

So will the court assume I have no debt (even though i am £50k in debt) and therefore my wife is left with all the equity and I am left with a hugh debt that i not recognised?

She is also going to be applying for costs which i know is unlikely to succeed but if the court considers me to be debt free then this might very well happen
Re: Company loans and soft loans
davidterry - 30 January, 2018 05:56PM
Since you do not give any figures or any basic information such as the length of the marriage, whether there are dependent children etc no-one can speculate on the answers to the questions you ask.
Re: Company loans and soft loans
Willapp - 31 January, 2018 09:04AM
Just as a suggestion, could you not get an unsecured loan from a normal high-street provider for the £20k instead of borrowing it from the company? Surely that way it would be considered a 'hard loan' and a provable debt? Providing you have a reasonable credit rating I would think such a loan not difficult to obtain?
Re: Company loans and soft loans
HatMan - 31 January, 2018 10:47AM
Yeah - but then he would have to pay interest and actually repay the debt.........
Re: Company loans and soft loans
beenans - 31 January, 2018 12:52PM
Hi sorry for the lack of information - marriage was 9 years, 2 children. House equity £300k and shares valued at £300k by court appointed valuer (but a private limited company so I cannot sell them even if i wanted to, this would jsut be the value if they were sold on the open market, which isnt very helpful as they are not sellable)

I am trying to get an unsecured loan of £25k to pay the company debt. Then have around £20k in solicitors fees etc which i will have to fund with another loan from company as cant borrow any more.

Any money i borrow from the company I will have to pay back regardless if the court rules them a soft loan
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