Capitalising long term loan

Capitalising long term loan

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My client (a limited company) owes a long standing debt (around £60k). The lender is prepared to forgive the debt The company could then cancel the liability and replace the loan with a capital reserve. I fearl that this treatment might generate a taxable capital gain..

Alternatively can I issue non voting shares to the lender in settlement of his debt? Would this solve the capital gain problem as well as clean up the Balance Sheet?
John O'Brien

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