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Concerned about overdrawn directors loan account and insolvency

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Concerned about overdrawn directors loan account and insolvency

I would really like some advice with the following problem:- My wife and I are Directors of a Ltd company trading for the last 15 years. No other employees. The company is a vehicle for me selling my consultancy services. There is currently a £10 000 overdraft (hit maximum); Corporation Tax due at end of April of £19k; and £5k VAT outstanding. I have not had any work since October 2013. There is an overdrawn Directors Loan account of £30,000 which I am worried about. Being a consultant I have no company assets to speak of, just a laptop. I am thinking a voluntary liquidation is the only way out - any suggestions would be appreciated.


Answer

The company does appear to be insolvent on a cash flow basis although it is only borderline insolvent on the balance sheet. Are you in a position to repay the overdrawn director’s loan account? You should be aware that any liquidator will seek to recover this as it is monies that are owed to the company and should be collected for the benefit of creditors. Accordingly your own personal financial situation is also relevant and there may well be a conflict between your duties as a director and your personal interests.


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