Sorry - asking similar questions! Enforcing a private loan without a contract

S_O_S

Hi, looking for a bit of advice for a friend. A few years ago, he and his partner were given some money to start a business by her mother (kind of as inheritance), a business which unfortunately was hit by the recession and didnt survive.

My friend nearly worked himself to death (literally) trying to keep their family afloat while his partner suffered from depression. As far as I know, the money wasn't handed over with a contract, no paperwork was signed, it was just put into the business account for them to start the business.

The couple have now split up. The girl and her mother demanded the vehicle back that had been bought for the business which worked out as half of the money lent - no problem with that, but they are now saying that he is still liable for the entire debt + £7K more for some reason (!) despite the money being lent to the couple to start the business and him giving the vehicle back to them. Since she threw him out the business has folded and he is on the brink of personal bankruptcy and now he is being hounded for this money.

How on earth will this be resolved?

Thanks for any comments x

pauletruth

was it a ltd company.

mo786uk

they will have to take him to court - it will be very hard to enforce an unwritten contract

iolanthe07

Personal bankcruptcy is not the end of the world; that may be the way out for him, but he needs to take professional advice. There is a bankcruptcy sub-board here that is very supportive.

paddyrg

If he hasn't got the money, he can't pay them. If the money was clearly for a business venture that went pop, and the assets of that venture have been divided equitably, there is not much more that can be done. Was the wife not hoping to benefit from the business also if it made a profit? Did she not work in it? Let them take him to court if they must, but I cannot imagine they will get much beyond what they have already.

chanz4

Tell him to send the prove it letter, also ask for a signed copy of the agreement ohh I love these type of threads

marmite_hater

thanks for everyone's comments. Yes it was a Ltd company. I just feel so bad for him that he tried to make it work, she was sick and not working and now all the liability is seeming to be placed on his shoulders.

As an ex bankrupt, I know there is no shame in it, but it wasn't a pleasant experience and I want him to avoid that if he can. I just think this should be more fair than it is? If she was also a company director then surely half the liability is hers?

Thanks again x

marmite_hater

paddyrg wrote: »

If he hasn't got the money, he can't pay them. If the money was clearly for a business venture that went pop, and the assets of that venture have been divided equitably, there is not much more that can be done. Was the wife not hoping to benefit from the business also if it made a profit? Did she not work in it? Let them take him to court if they must, but I cannot imagine they will get much beyond what they have already.

They were both company directors and he was doing the manual work and she was handling the office side of the business. Unfortunately that side of the business (invoicing, chasing up payments and paying suppliers) was the bit that got in a mess first

pauletruth

then its not his debt. as it was a ltd company the debt was owed by the company. unless he gave a personal guarantee then they can go swing. if the car would also have been a company asset which should be used to clear its debts.

jonesMUFCforever

Directors are equally liable for debts of a limited company.
Whatever debts the limited company has has to be covered by the directors.
Was this by bank overdraft ? If so it is unusual for a bank to grant o/d facilities without taking out director guarantees.
Did this happen?

opinions4u

jonesMUFCforever wrote: »

Directors are equally liable for debts of a limited company.
Whatever debts the limited company has has to be covered by the directors.
Was this by bank overdraft ? If so it is unusual for a bank to grant o/d facilities without taking out director guarantees.
Did this happen?

The ltd company is what is liable for the debt.

The directors and shareholders aren't.

If the assets of the company aren't enough to cover the liabilities, nobody else has to pick up the bill.