Loan to write off?

Coala

Hi. I have a private person who took a loan from bank. That person gave that loan to limited company. Company pays back in instalments plus interest on that. But now that private person lost job and insurance pays the loan off. Question is: how to deal with this situation? Do the company still have to pay loan back as usually or have to write off :cool: ? Any advice appreciated. Thanks.

HeinekenTicket

Two questions:

how did you account for your private person 'giving' the loan to the company in the first place (in the company's accounts)? Was it booked as a loan to the company? If not, what was the bookkeeping?

is your private person a director of the company? If not, is there any relationship between private person and the company, other than by reason of 'giving' the money?

Coala

yes it was booked as loan to the company from private person. This person has nothing to do with business,not director just friend.

Little Miss Cutie

Is it insurancw fraud to claim for a loan when the person is in a position to pay it?
Also did they obtain a loan on false grounds?

HeinekenTicket

If the unconnected private person has forgiven the loan to the company, then the company no longer has an obligation => no liability. However, if I was that unconnected individual and lost my job, I'd still want to be repaid the loan.

Coala

hhmm..never thougth from this side. Somehow you are right. That person just took loan on his own responsability to help out. And now just want to forgive the loan. Fraud? not really, the loan is not paid back to that person for while already (strugling with cashflow). Even do not know what to do now?