Q&As

A company has loaned money to another group company which is not repayable for ten years. If the company which has loaned the money enters an insolvency process, can the administrator or liquidator do anything to get it repaid earlier?

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Produced in partnership with Caroline Clark
Published on LexisPSL on 19/05/2020

The following Restructuring & Insolvency Q&A Produced in partnership with Caroline Clark provides comprehensive and up to date legal information covering:

  • A company has loaned money to another group company which is not repayable for ten years. If the company which has loaned the money enters an insolvency process, can the administrator or liquidator do anything to get it repaid earlier?

If one company has loaned money to another, it will be the terms of the contract that provide the legal restrictions on whether the loan may be repaid earlier than the ten years initially envisaged.

If the lender company goes into liquidation or administration, this will not of itself change the terms of the contract. The office-holding insolvency practitioner should, however, check the terms of the contract to see if the contract provides for the loan to be repaid sooner or under different terms in the event of the lender company going into liquidation or administration. This may seem unlikely, but it is possible and the officeholder should pursue all options to achieve earlier repayment of the loan.

The office-holding insolvency practitioner would appear to have an appointment that has to be held open for at least ten years before the loan can be repaid and a dividend paid to the creditors. Office-holding insolvency practitioners are under regulatory pressure to close th

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