Loaning Money In Liquidation

Summary

Loaning money to a former directors step-daughter during a companys voluntary liquidation is generally permissible in the UK, provided there is no conflict of interest or connection to the liquidation process. It is important to have a written loan agreement with clear repayment terms. If your mother provides the loan, it may face less scrutiny, but it is still advisable to seek independent legal advice to ensure compliance with relevant regulations and avoid potential complications.

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I’m in the UK. I am purchasing assets at fair market value from a company in members voluntary liquidation. Am I able to loan the former directors step-daughter an amount of money?
Hi Dan, thanks for your detailed description. To provide accurate gui****ce, could you clarify if the loan to the former director's step-daughter is in any way connected to the asset purchase or the company's liquidation process?
No
Hi Dan, thanks for the clarification. In the UK, you can generally loan money to anyone, including a former director's step-daughter, provided there is no connection to the company's liquidation process and no conflict of interest. Here are a few points to consider:
- Ensure the loan agreement is in writing.
- Include clear terms for repayment.
- Consider seeking independent legal advice to ensure compliance with any relevant regulations.
Is there anything else specific you need help with?
What conflict of interest might there be?
Hi Dan,
A potential conflict of interest might arise if:
- The loan influences decisions related to the company’s liquidation.
- The former director’s step-daughter has a significant role in the liquidation process.
- The loan could be perceived as a way to indirectly benefit the former directors.
Is there any specific aspect of the conflict of interest you're concerned about?
Would it be legally permissible though?
Hi Dan,
Yes, it would generally be legally permissible to loan money to the former director's step-daughter, provided there is no conflict of interest or connection to the company's liquidation process. Just ensure:
- The loan agreement is in writing.
- Clear repayment terms are included.
- Independent legal advice is sought.
Is there anything else specific you're concerned about?
What if my mother loaned it to her? Would it still be scrutinised to the same extent?
Hi Dan,
If your mother loans the money to the former director's step-daughter, it would likely be scrutinized less, as there is no direct connection to you or the company's liquidation. However, it's still advisable to:
- Ensure the loan agreement is in writing.
- Include clear terms for repayment.
- Seek independent legal advice to avoid any potential complications.
Is there anything else specific you need help with?