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Liquidated Company - rights of creditors

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Quite historic this one, relating to a question asked by one of the former Directors, who is a sole trader client of mine, and this topic cropped up in a recent conversation.  He's curious more than anything, having had a lot of thinking time available due to being ill.

Company liquidated more than 10 years ago.  There was a 10k credit card balance, taken out when the Company operated as a partnership and continued being used in the Company.  The debt was pursued against one of the partners but quashed because they had also put in a claim to the liquidator of the Ltd Co.

There was also a large debt to a bank, who had pg's against both Directors.  The bank only pursued one of the Directors, as the other had gone into a personal IVA. and an equitable charge was placed on his share of his house.

The bank hasn't chased in the meantime but he is asking (after all this time!) if  the bank was within it's rights to personally pursue the debt.

I would say yes, but he's of the impression that if the credit card debt was quashed because of a claim against the Ltd Co, then it's possible that the bank loan would be as well.  

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By zebaa
18th Oct 2021 17:30

If he has not heard from the bank for ten years then the bank, most likely, has written it off. For most debts there is a time limit of six years, though some, like mortgages can be longer.

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By Paul Crowley
18th Oct 2021 17:52

A charge against a property lasts as long as the property is in the defaulters hands has always been my understanding.
Check with Land registry to see if it is still there

The 6 year rule is for unpersued debt, take to court or accept it is lost forever.

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By DKB-Sheffield
18th Oct 2021 23:21

Agree with Paul. Very unlikely if a charge is in place that the debt will have simply 'disappeared'. The bank may not have chased it on the simple proviso that they know the property cannot be sold or transferred without the charge being released. More likely the bank resting on their laurels than having written off the debt without notification.

As Paul has said, get a title register from the Land Registry (it's only £3) and see if a charge is still in place.

Incidentally, my understanding was always that a debt which was the subject of a granted court order has no time limit. I may, however be wrong? Or, it may not apply in this case? I'm sure 'TheInsolvencyPractitioner' could provide clarity? (thanks in advance IP)

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Lisa Thomas
By Lisa Thomas
19th Oct 2021 10:17

You say the credit card debt was 'quashed' because the bank claimed in the Liquidation, but what came of the claim - was a 100% dividend (plus interest from date of Liquidation to date of dividend) paid by the Liquidator (this is rare so unlikely)?

I believe if the credit card company hasn't pursued the debt within the last 6 years it is statute barred.

As regards the debt owed to the Bank which is secured against the property, this hasn't gone away. The bank are merely happy to sit back and wait, relying on the security of its charge.

As DKB says, a simple land registry search will confirm that it is still in place.

As regards how long a CCJ lasts - I understand it only last for 6 years but the applicant can reapply to Court for enforcement after 6 years.

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