Selling house to fund business

Worried_Grandma

I am new to the forum and I hope someone can help me. My son's partner went into the restaurant business about 18 months ago with her friend. The business is struggling and now they are talking about selling their house to help. They will go into rented accomodation with their 2 year old. The other girl's in laws lent her £20K towards the business they now want it back. Is my son's partner liable for this debt? The business is Ltd and I beleive it has about £15k of debts including £6k to HMRC.

TrickyDicky101

It depends what if any contract was entered into when the original loan was advanced (eg were personal guarantees from the business owners a prerequisite for advancing the loan). Your son is potentially taking a huge risk. I would be very concerned, as I'm sure you are.

LandyAndy

Restaurants are notoriously difficult businesses. I wouldn't contemplate voluntarily selling my home to fund one. Talk about good money after bad.

I guess the original lenders want their money back before it disappears.

mlz1413

Selling a home is a huge commitment and if the business is struggling due to the finanical climate then I would be extremely worried about putting more money in.

Ltd companies can normally liquidate without the directors / shareholders being liable for unsecured debts - ie money owed to suppliers. But secured loans, bank overdrafts & HMRC have more rights.

poppysarah

So 35k of debt and they're looking at putting more money into it?

LandyAndy

poppysarah wrote: »

So 35k of debt and they're looking at putting more money into it?

geoffky

Stop them..unless you are making a profit in the first twelve months in a restaurant you will most likely always struggle..they are either a money spinner or a endless drain...
Tell them to stop chasing the magic rainbow as in catering they a few and far found..
Time for them to bail out as in my opinion this recession has left its mark that will take many many more years until we are back on a even keel.
I think discretionary spending on things like eating out for meals are going to be cut and cut as inflation and uncertainty take hold in the economy

mostlycheerful

Yes, I agree with the other posters, restaurants are a notoriously hard business, as hard or even worse than, for instance, manufacturing women’s fashion clothing, leasing pubs owned by chains etc. Loads of people fail at restaurants, it’s very common.

Unless they’re incredibly lucky or incredibly clever they’re clearly going down the pan so it’s time to abort mission and jump ship. And chucking a house onto the bonfire and going into rent hell instead is a terrible idea. No, don’t let them do that.

No, sell up fast to some other mug or someone who’s already got 10 successful ones and knows what to do to turn it around. But don’t just let inexperienced, novice people who clearly haven’t got a clue continue to dig an even deeper hole for themselves. That’s tragic. Yes, intervene and be forceful about it and talk some sense into them and try to save them before it’s too late. Well, maybe it is already too late so all you can do is try to salvage something out of the mess and the debacle. Oh dear, how sad. However, this happens all the time everywhere when people who don’t know anything about a very difficult business blithely borrow loads of money on a whim and a prayer and then lose the lot and more. Put it down to experience and do something more straightforward and less difficult with your lives.

No, don’t let them get rid of the house, they may never manage to own a place again if they do that and rent hell is very much to be avoided, that’s just a total losers’ disaster for most people. Sucks all the life out of you while you enrich a landlord who eventually, sooner or later, chucks you out when he/she doesn’t like you any more or wants to sell up or give it to their own kids etc.