Claiming capital loss for company creditors on loan default

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 · Accepted Answer

RichATO · Answer

Did the company directors sign personal guarantees when they accepted the loan ? That's often standard practice with creditors lending to small business. Worth finding out. If they did then they can make a capital injection or loan to the company to pay the debt and claim the loss. How likely is it in the current climate that the creditors will forgive the debt if it's at arms length ? In direct answer to your two questions: A) I would think that the forgiveness of the debt is highly unlikely, particularly if personal guarantees from directors were obtained; B) Issuing shares is not the right way to handle this matter. The owners need to make a capital contribution, or provide a loan to the company so it can repay the debt.

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