Director's loan account with preference.

Discussion in 'Insolvency' started by Ryan Mundy, Dec 27, 2018.

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  1. Ryan Mundy

    Ryan Mundy UKBF Contributor Full Member

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    Is it possible for a director or a directors wife to loan money to a company and accord preference to the director's loan or wife loan. Either preference over the other creditors or equal preference?

    Thanks in advance.
    Posted: Dec 27, 2018 By: Ryan Mundy Member since: Sep 19, 2018
  2. Gavin Bates

    Gavin Bates UKBF Enthusiast Free Member

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    I am not sure what you mean by accord a preference. However I am assuming you mean put the loan in a better position than other if the company fails. If so you may want to look at the following;

    1) set up a proper loan agreement with a repayment schedule. This will offer some protection against claims against preferential treatment.

    2) even better the company can grant security ( a debenture ) prior to the loan being given which will provide a better return if the Company returns.

    Both options cost money so it will depend on the amount of the loan to consider whether this worth it.


    Posted: Dec 27, 2018 By: Gavin Bates Member since: May 9, 2016
  3. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I agree with Gavin - the only way to get a preference above unsecured creditors would be to get a debenture in place before advancing the funds.
    Posted: Jan 2, 2019 By: Lisa Thomas Member since: Apr 20, 2015
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