DLA set off by personal purchases on credit card and loan repayment

Discussion in 'Insolvency' started by Business owner 123, Jan 13, 2019.

  1. Business owner 123

    Business owner 123 UKBF Newcomer Free Member

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    I was the director of a ltd company that went into liquidation in 2012. At the time there was a Dirctors loan account outstanding of £20000. I had run up personal credit card and business loan of the same amount that I have since paid off. Can these be set off against the DLA
     
    Posted: Jan 13, 2019 By: Business owner 123 Member since: Jan 13, 2019
    #1
  2. Gavin Bates

    Gavin Bates UKBF Regular Free Member

    492 101
    Hi

    If you can prove that these monies were business related then yes you can offset them.

    Regards

    Gavin
     
    Posted: Jan 13, 2019 By: Gavin Bates Member since: May 9, 2016
    #2
  3. Business owner 123

    Business owner 123 UKBF Newcomer Free Member

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    Hi. Thanks for your reply.
    At the time of the liquidation the IP said that it would be set off but then the annual review did not mention it but said he was chasing up repayment of DLA. Every time I rang him he to remind him he would say that it was fine and the DLA did not need to be repaid.
    I paid back to credit card used for the business materials and business bank loan over about 5 years.
    I have just had a letter from the IP saying that according to The insolvency act 2016 rule 14:25 that there was no mutual dealings with the company and we had to “stand in the shoes” of the creditors. He is only now after 7 years given his reason for asking for repayment.
    This does not seam fair.
     
    Posted: Jan 13, 2019 By: Business owner 123 Member since: Jan 13, 2019
    #3
  4. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    Did these business costs on your personal cards happen after the last published accounts for the company?

    if before that date then why were they not already incorporated within your DLA for earlier years.
     
    Posted: Jan 13, 2019 By: UK Contractor Accountant Member since: Sep 18, 2013
    #4
  5. Business owner 123

    Business owner 123 UKBF Newcomer Free Member

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    After
     
    Posted: Jan 13, 2019 By: Business owner 123 Member since: Jan 13, 2019
    #5
  6. Gavin Bates

    Gavin Bates UKBF Regular Free Member

    492 101
    Hi

    I don’t understand the liquidator points. If you owed the company money and also paid for company liabilities then there is a clear right of set off.

    Regards

    Gavin
     
    Posted: Jan 13, 2019 By: Gavin Bates Member since: May 9, 2016
    #6
  7. Business owner 123

    Business owner 123 UKBF Newcomer Free Member

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    So what are my options to appeal against the IP asking me to repay the DLA.?
    Get another IP to act for me?
    Or a solicitor specialising in business liquidation?
    Or get my accountant to produce a final set of accounts for the liquidated company that would show the DLA set off by purchases of business materials and a bank loan paid by me?
    The bank loan was to the ltd company with me as a director giving personal guarantee.
     
    Posted: Jan 13, 2019 By: Business owner 123 Member since: Jan 13, 2019
    #7
  8. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    I do not believe you can offset the bank loan repayments if these were actioned under the personal guarantee.
     
    Posted: Jan 14, 2019 at 7:11 AM By: UK Contractor Accountant Member since: Sep 18, 2013
    #8
  9. Gavin Bates

    Gavin Bates UKBF Regular Free Member

    492 101
    Hi

    It is becoming clearer. If you paid the bank loan after liquidation, even though you had a personal guarantee then you can’t offset that against your DLA. You can however replace the bank as a creditor in the liquidation.

    Regards

    Gavin
     
    Posted: Jan 14, 2019 at 8:48 AM By: Gavin Bates Member since: May 9, 2016
    #9
  10. Blaby Loyal

    Blaby Loyal UKBF Enthusiast Free Member

    682 132
    Following on from GB's post #9, you may well have a subrogated claim against the company insofar as you have replaced the bank as a creditor.

    In certain circumstances you can benefit from any security the bank held from the company although by virtue of the fact that the bank has called on the personal guarantee then that would imply any such security would not be worth 'powder and shot'.

    If you have paid any sum to the bank due under an overdraft and the company had employees then you can raise the subject of whether you have a preferential wages claim (a 'proper' IP may come along and correct this). 9/10 there isn't one but the thought of the rigmarole involved in the calculation alone ought to be enough to give the liquidator cause for a rethink on their recovery strategy from you.
     
    Posted: Jan 14, 2019 at 11:05 AM By: Blaby Loyal Member since: Jun 12, 2018
    #10
  11. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I would think the Lqr will want to see evidence that the loan was for the purposes of the wages.

    The preferential claim for arrears of wage is capped at £800 per employee.
     
    Posted: Jan 14, 2019 at 11:20 AM By: Lisa Thomas Member since: Apr 20, 2015
    #11
  12. Blaby Loyal

    Blaby Loyal UKBF Enthusiast Free Member

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    That's why I specifically made the comment "If you have paid any sum to the bank due under an overdraft ..."
     
    Posted: Jan 14, 2019 at 11:23 AM By: Blaby Loyal Member since: Jun 12, 2018
    #12
  13. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    I can't see the relevance of the overdraft?
     
    Posted: Jan 14, 2019 at 3:06 PM By: Lisa Thomas Member since: Apr 20, 2015
    #13
  14. Business owner 123

    Business owner 123 UKBF Newcomer Free Member

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    Thanks for your information. It has really opened my mind to the complexity of the rules. I feel I need a professional insolvency expert to act on my behalf. I wonder if I have a claim against the IP who dealt with my company’s liquidation as I believe I was mis-lead as to my position and options before we took the decision to go into liquidation.
    What advice would you give to me to help me counter the claim by the IP of my former company?
     
    Posted: Jan 14, 2019 at 10:40 PM By: Business owner 123 Member since: Jan 13, 2019
    #14
  15. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Do you have any evidence that you were misled?

    What is it you think they misled you about?

    You need to instruct an Insolvency Solicitor to dispute the debt.
     
    Posted: Jan 15, 2019 at 9:05 AM By: Lisa Thomas Member since: Apr 20, 2015
    #15
  16. Business owner 123

    Business owner 123 UKBF Newcomer Free Member

    6 0
    I have the testimony of my accountant who acted for me during the liquidation.
    The Liquidator agreed at the time of the liquidation that the DLA was set off by my personal creditcard payments and bank loan and he gave advice to go for a voluntary liquidation.
    Now he has changed his mind after 7 years.
     
    Posted: Jan 15, 2019 at 9:29 AM By: Business owner 123 Member since: Jan 13, 2019
    #16
  17. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Best to instruct an Insolvency Solicitor to defend you.
     
    Posted: Jan 15, 2019 at 9:53 AM By: Lisa Thomas Member since: Apr 20, 2015
    #17
  18. Blaby Loyal

    Blaby Loyal UKBF Enthusiast Free Member

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    Yes, a solicitor experienced in insolvency is likely to be your best bet here.

    Don't speak to one in the same locality as the liquidator as they are bound to be best buddies and unlikely to upset one another which will be at your expense.

    Also ask whether the debt is statute barred as you have mentioned the 'magic' figure of seven years.

    And definitely hold the liquidator to their affirmation in the presence of the accountant that there would be a right of set-off etc.

    Insolvency practitioners, I can count the number of decent ones I've met on the thumbs of each hand.
     
    Posted: Jan 15, 2019 at 10:30 AM By: Blaby Loyal Member since: Jun 12, 2018
    #18