Liability For Company Loan Repayment

[wood6]

Hi

Looking for some info...

I was a sleeping partner in a n IT company. I made a very small investment along with the 2 directors. They decided to take out a loan for further finance. I was never named on the loan and nor did i have anything to do with the management of how it was spent. I merely advised on some of the technical side of the project. The project never came to fruition and I lost interest and backed away as things seemed to come to a hault.

I never saw what the loan was spent on nor did I ever receive any cash or profit.

Could someone advise if I am liable in anyway to pay back on such a loan? I thought it was only the directors that carried such liability? A SPEEDY RESPONSE WOULD BE MUCH APRECIATED.

 

[OldWelshGuy]

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[kulture]

If you are not a director and did not sign any loan guarantee form then you are not liable. Indeed directors are not normally liable either unless they signed a guarantee.

This is the whole point of a limited company.

 

[jules12345]

Hi

Looking for some info...

I was a sleeping partner in a n IT company. I made a very small investment along with the 2 directors. They decided to take out a loan for further finance. I was never named on the loan and nor did i have anything to do with the management of how it was spent. I merely advised on some of the technical side of the project. The project never came to fruition and I lost interest and backed away as things seemed to come to a hault.

I never saw what the loan was spent on nor did I ever receive any cash or profit.

Could someone advise if I am liable in anyway to pay back on such a loan? I thought it was only the directors that carried such liability? A SPEEDY RESPONSE WOULD BE MUCH APRECIATED.

People would need more facts on which to give you advice. Was there a partnersip agreement...?

Liability in partnership law is based on a four stage test and by s.5 PA in this instance probably.

If you were a non sleeping partner then yes unless the loan was taken out illicitly and you could prove partner negligence or breach.

As a sleeping partner as there is no law I am aware of within the PA that says sleeping partners will not be liable or as liable as a non sleeping partner would. The only way round it would be to have the terms drawn up in the partnership agreement. If there is no partnership agreement then by deduction (unless someone can calrify the matter to the opposite effect) then you would be liable.

The question you might ask, did the other partner that took out the loan do it legitimately. More information would be needed to answer this.

Is there a partnership agreement ?

Regards
Jules

 

[bovine]

kulture i agree with, not sure where jules is going with his comments. Assuming its a limited company ( and you mention directors, so thats a fair assumption) then unless you have specifically signed a persoanl guarantee, then there will be no liablity. i think jules has latched on the partner part, but it sonds like you are a shareholder.

 

[wood6]

guys

thanks for this info...

aother quick q for you....I take it I could not have been named as a director unless I signed anything??

 

[lockyer]

If you PM the company name, I can double check online for you, and list all the directors names for you if that helps

 

[OldWelshGuy]

Sleeping partner should mean shareholding, but could mean being a director, they may have filed online and included you.

 

[wood6]

Would they be able to name me as a director even tho I never agreed to or signed anything??

 

[kulture]

You can check on companies house who has been named as a director of a company. Again, if you have signed nothing it would be unusual to be liable for a companies debts. A director can be liable in some circumstances but you would need a lot more detail to see if this is the case here. What normally happens is that some creditors get heavy handed and make all kinds of empty threats trying to intimidate you to pay up. Unless and until they can prove that you personally are liable then you have nothing to worry.
If they keep harassing you, ask them to detail on what basis they think you are liable.

 

[PeterG]

Liability requires consent.
Unless their is any contractual reason you should repay the loan, your only obligation is moral.

You should check Companies house as to what the business structure is, but I wouldn't worry. You could be listed as you're a sleeping partner, which could mean being listed as a director but without your signature on a loan agreement, they will have a very difficult time getting any funds from you.

It is, sadly, common practice to use such scare-mongering to extract funds from interested parties in times of financial difficulty

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