Q&As

Are directors jointly and severally liable for each other’s overdrawn director's loan accounts if the company goes into liquidation? What case law and/or statute supports this assertion?

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Published by a LexisNexis Restructuring & Insolvency expert
Published on: 01 March 2022
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We have been unable to find any authority to support the proposition that, in itself, a director of a company is jointly and severally liable for any other director's overdrawn loan account. Though we consider it likely that if a loan account is in joint names (for example in the company's ledgers) and is truly operated as such, then the joint named directors would probably be jointly and severally liable for any overdrawn amount on that given account.

There may, however, be other ways

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United Kingdom
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Key definition:
Directors definition
What does Directors mean?

A director of a company is responsible for the day-to-day management of that company. The directors make decisions on behalf of the company in order that it can carry on its business.

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