Preferential Payment Question

[frank92]

Hello, i've been speaking with Business Debtline regarding my company (ltd) closure and when I mentioned the possibility of paying a debt personally they felt this might not be a preferential payment as it uses personal funds rather than company funds.

Can anyone confirm or deny this as they weren't absolutely sure? Thanks!

 

[ChrisCallaghan]

My two cents:

If you put your personal money into your company, and then the company paid this, it would be considered pref. If you personally paid one of your company's creditors directly from your personal bank account, then it wouldn't be considered as pref.

May I ask why you wish to look after this particular debt?

 

[frank92]

My two cents:

If you put your personal money into your company, and then the company paid this, it would be considered pref. If you personally paid one of your company's creditors directly from your personal bank account, then it wouldn't be considered as pref.

May I ask why you wish to look after this particular debt?

Thanks for the quick reply Chris! I only have a couple of debts and plan to pay them both, but this is the more pressing of the two so looking to sort this out first.

 

[Paul Kelly ICHYB]

As a limited company, unless you have a PG on the debt, neither should be considered more pressing, especially if you are closing the business.

 

[IanSuth]

Unless it is a debt to someone you may have need of a line of credit with/business relationship in the future

 

[Elliot Green]

Hello, i've been speaking with Business Debtline regarding my company (ltd) closure and when I mentioned the possibility of paying a debt personally they felt this might not be a preferential payment as it uses personal funds rather than company funds.

Can anyone confirm or deny this as they weren't absolutely sure? Thanks!

It depends on what you mean by a preferential payment. Absent a PG for example if you *personally* pay a company creditor in preference, that you personally have no obligation to pay then it is improbable there can be any *preference* by the company because the company hasn't made the payment. There are of potential circumstances that can give rise to exceptions which means a definitive position often cannot be promoted.

This is not legal advice and should not be relied upon as such. This is provided for information purposes only. It is to be recommended that in such instances a party should consider taking advice on the full and precise facts of the case.

 

[Daybooks]

My two cents:

If you put your personal money into your company, and then the company paid this, it would be considered pref. If you personally paid one of your company's creditors directly from your personal bank account, then it wouldn't be considered as pref.

May I ask why you wish to look after this particular debt?

If you follow the accounting entries (and the money) then the payment from personal funds would still leave the creditor in the company. If this debt no longer exists then it needs to be discharged in some way in the Company’s accounts, either by writing off (per se) or by settling via a director’s loan account. I am no legal expert but either way if I were another creditor not being paid I might, justifiably, have something to say. This creditor appears to have been afforded a preferential treatment either directly or through a connected party, at my expense.

 

[Lisa Thomas]

What you do with your own money is up to you. What you do with the company's money and assets when it's insolvent is a different matter and needs to be handled carefully.