Transferring balance of business loan to a new company

Buttercake

Scenario is

Company A, setup 5 years has a loan out of €50,000 with personal guarantees from directors.

Company B, setup 1 month, no trading history - opens an account with same bank, same directors.

Company A is insolvent/struck off/liquidated, all business has transferred to Company B.

Can the directors request the balance of the loan to be transferred to Company B?

Thanks in advance

pedroeibar1

Buttercake wrote: »

Scenario is

Company A, setup 5 years has a loan out of €50,000 with personal guarantees from directors.

Company B, setup 1 month, no trading history - opens an account with same bank, same directors.

Company A is insolvent/struck off/liquidated, all business has transferred to Company B.

Can the directors request the balance of the loan to be transferred to Company B?

Thanks in advance

The answer is “Probably not” - why should a company take on the debts of an unrelated entity?

There are many more details needed (capital PIF in B / newco, value of other assets, amount of debt, are the shareholders the same, does the guarantee by directors continue, etc., etc.) Should anything negative happen to newco you could find yourselves in trouble with the ODCE

The lender would also want a say in the matter – why would it allow a transfer of liability instead of looking for payment from the guarantors?

pedronomix

taking on unrelated debt is a big legal no no , even more so between related parties. Get smart!

Joseph

Remember these are separate legal entities. Treat them like a 'person' so to speak, why would person B take on person A's debt?

delahuntv

nope - but as its personally guaranteed the bank will probably create a new personal loan for the original loan to be paid off.

If the new company assumed responsibility, then every creditor can potentially claim from the new company.