Director resignation and money owed

Didn't find your answer?

I want to resign as director. The business owes me money as I loaned it to help build up the business. It is recorded in Xero as Director Loan Account. However it doesn’t have to pay me now as it is a big sum. I would like to get instalment plans. I manage accounting and I record everything in Xero. So my question would be what proof/ evidence do I need in case if they don't pay instalments plan? What actions do I need to take in case if I will have to contact solicitor and go to court? I don't want to leave the company and pass my accounts to someone else without having actual and valid evidence that the money is owed to me and how much. I feel written email is not enough. Besides I don't want to leave the company without maintaining good relationship but I have learnt from the past where money is involved words are not enough and that the court would need to see an actual evidence of the money owed to me the day I am leaving eg. accounting record if it comes to that? But I am not sure what accounting record would be accepted in court? Year End Accounting doesn't really show how much is owed to Director. Besides I'm only bookkeeper so I am not sure what to print off and keep as an evidence? 

Replies (13)

Please login or register to join the discussion.

the sea otter
By memyself-eye
24th Apr 2020 16:01

You need someone called a SOLICITOR.

Thanks (2)
avatar
By zebaa
24th Apr 2020 16:05

Your question begs a lot more information, but on the facts supplied here goes. If you can’t prove you have lent money you’re stuffed. However I would be very surprised if there were not some record you could access. If the company does not have the money then getting instalments might just be as good as it gets. If the company goes bust you loose. You can resign as a director at any time up to a liquidator getting involved.

Thanks (0)
Replying to zebaa:
avatar
By Accountsforus
24th Apr 2020 17:24

It is recorded as Director Loan Account on Xero, so yes it is recorded. The company is doing fine so not going to bust. I want to resign due to career change. My apologies if I wasn’t specific I will amend question. I would like to know what I need to print off to have a proof that the company owes me money in case if they will not pay instalment plans. I don’t want to involve solicitor now as I want to leave in good way. I want to maintain good relationship with everyone involved.

Thanks (0)
Replying to Accountsforus:
avatar
By SXGuy
24th Apr 2020 18:44

Have you considered a bank statement showing the money being paid out and in? And the loan agreement you had drawn up when you lent the company money
Just a thought..

Thanks (0)
RLI
By lionofludesch
24th Apr 2020 16:09

It's a lawyer's job.

Take advice at the earliest opportunity.

Thanks (0)
avatar
By Accountant A
15th Jun 2020 20:25

[08y

Thanks (1)
the sea otter
By memyself-eye
24th Apr 2020 18:58

Scenario:
Man lends money to company
Company spends money
Man wants money back
Money is 'all gone'
Man loses shirt
Ask anyone who bought shares in Sirius minerals in Yorkshire or tulips in Amsterdam- there's a song there- or anywhere in the South Sea!
Caveat Emptor

Thanks (0)
Replying to memyself-eye:
RLI
By lionofludesch
24th Apr 2020 19:09

Quote:

Scenario:
Man lends money to company
Company spends money
Man wants money back
Money is 'all gone'
Man loses shirt
Ask anyone who bought shares in Sirius minerals in Yorkshire or tulips in Amsterdam- there's a song there- or anywhere in the South Sea!
Caveat Emptor

How is this relevant ?

The OP says the company is doing well.

There's no need for these remarks.

Thanks (0)
.
By Cheshire
24th Apr 2020 19:43

Quote:

I want to resign as director. The business owes me money as I loaned it to help build up the business. It is recorded in Xero as Director Loan Account. However it doesn’t have to pay me now as it is a big sum. I would like to get instalment plans. I manage accounting and I record everything in Xero. So my question would be what proof/ evidence do I need in case if they don't pay instalments plan? What actions do I need to take in case if I will have to contact solicitor and go to court? I don't want to leave the company and pass my accounts to someone else without having actual and valid evidence that the money is owed to me and how much. I feel written email is not enough. Besides I don't want to leave the company without maintaining good relationship but I have learnt from the past where money is involved words are not enough and that the court would need to see an actual evidence of the money owed to me the day I am leaving eg. accounting record if it comes to that? But I am not sure what accounting record would be accepted in court? Year End Accounting doesn't really show how much is owed to Director. Besides I'm only bookkeeper so I am not sure what to print off and keep as an evidence? 

I would suggest that you dont edit the original question further, as people have already responded to the question as original posed.

What do you mean by the ''End Accounting doesn't really show how much is owed to Director''? Why is this? Due to the bulk being lent after the year end or for some other reason? Who prepared and signed off these Accounts?

Thanks (0)
avatar
By bernard michael
25th Apr 2020 09:18

On a point of law e-mails are now accepted as evidence in most cases
If you can't get a written agreement
Get an e-mail from the company directors agreeing to pay back the loan
This should quote the sum currently outstanding, the amount and regularity of repayments. Take a copy of the Xero account the balance of which should show the same figure as the e-mail

If they refuse this methinks get thee to a solicitor with due haste

Thanks (0)
avatar
By paul.benny
25th Apr 2020 12:29

Good comments by other posters. Also

- You can stop working for the company and remain as a director. This does give you a little leverage.
- Are the other directors aware of your loan? I hope so
- If there is no original agreement, you could request a written acknowledgement of the loan, together with a payment plan. A standing order will help as it doesn't rely on someone remembering your repayment.

Thanks (0)
the sea otter
By memyself-eye
25th Apr 2020 14:08

He still needs a solicitor.

Thanks (0)
paddle steamer
By DJKL
25th Apr 2020 16:07

Loan Agreement points:-

Amount?
Term?
Interest?
Security and ranking agreement?
Remedy if say installment missed, how many days is late etc, actions of default etc?
Is agreement to be just with company or are you looking for other directors to guarantee it?
Does early repayment get triggered by say change in control of the company, in case its shares are later sold to any Tom,Dick or Harry?
Delivery of notices under agreement, to whom, where, valid methods?
Do you want loan agreement recorded anywhere?
Ability to transfer/assign the debt, what happens in event of your demise?

I would have a deed drafted by a solicitor, they are pretty inexpensive if not all the bells and whistles needed (there are others) and if,before you go to them ,the parties have roughly agreed what is required.

Thanks (0)