Overdrawn director's loan account – pursuing a former Director during insolvency proceedings

The Client

An insolvency practitioner

Value of Dispute

£60,000

The Commercial Dispute

When an IT consultancy company entered into a Creditors’ Voluntary Liquidation, it was established by the Liquidator that the Director had a substantially overdrawn director’s loan account. The Liquidator had challenged the Director on this but had been largely ignored, or fobbed off with the Director claiming that he was due the money and therefore would not be making any form of payment. There were insufficient funds in the Liquidation to allow the Liquidator to pursue the Director, so they sought Escalate’s contingent solution.

How Escalate Resolved – Serviced Used

Escalate were engaged and attempted to resolve matters on a pre-action basis but the Director ignored the Letter Before Action and follow-up correspondence by email. We moved quickly to draft proceedings and issued legal proceedings against him. 

The Director then sprang into life and instructed a solicitor, who attempted to argue their client’s position on the overdrawn director’s loan account to no avail. Faced with having to file a defence and the costs associated with that, their solicitor spent a week returning to us with offers to settle and threats that if we proceeded, their client would be forced into personal bankruptcy. We persisted and offers steadily increased until such time as we were able to negotiate a settlement of £50,000 over 5 months at £10,000 per month – which has now been repaid.