Reducing a Six-Figure Liability by 80%

In the world of debt resolution, the key to success often lies in strategy, timing, and negotiation. This case study highlights the importance of expert intervention in reducing financial liabilities and avoiding the drastic consequences of bankruptcy.

This particular case saw us dealing with two relatives who were business partners. Their company was wound-up, and they found themselves facing significant personal liabilities due to an overdrawn Directors’ Loan Account (ODLA) of ￡106,984. An ODLA occurs when a director has withdrawn more money from the company than what has been repaid, essentially creating a debt that the director owes to the company. This often becomes a personal liability during insolvency proceedings, as the liquidator seeks to recover these funds for the benefit of the company’s creditors.

To understand more about how we assist clients in similar situations involving overdrawn Director’s Loan Accounts, you can watch our recent video where we explain our approach and success stories here.

One of the relatives was pursued for ￡17,000, whilst our other client named Rob faced a much larger sum of ￡89,984. Both had made offers to settle, despite it being unaffordable. The client owing ￡17,000 offered to pay the full sum back over the course of two years with Rob proposing a settlement of ￡25,000. However, despite these offers, they were met with silence from the liquidator and were left uncertain about their next steps. Realising they needed professional help to secure a more affordable outcome, they remembered receiving one of our ‘Settlement Of The Week’ emails in the past and reached out to avail of a free case review.

Our Approach

Understanding the urgency and the stakes, our strategy focused on demonstrating the clients’ limited financial means and leveraging their other creditor obligations. We meticulously compiled Asset & Liability statements for both clients, clearly illustrating their lack of assets. This documentation was crucial in showing that if a deal was not reached, both clients were prepared to go down the route of Bankruptcy - a move that would not benefit either party.

To strengthen our position, we proposed a pro-rata settlement approach, ensuring that all of the clients’ creditors were treated fairly. By highlighting the clients’ affordability issues and the risk of bankruptcy, we were able to significantly reduce the settlement amount.

Outcome

Our strategic negotiations led to a successful resolution: a combined settlement of ￡20,400, a significant reduction from the initial ￡42,000 put forward by the clients. This outcome represented total savings of ￡86,584!

Client Feedback

Our clients were extremely pleased with the outcome, particularly Rob, who was delighted that we managed to settle the entire liability for less than what he had initially offered to settle his portion alone. Their cooperation and willingness to work closely with us were instrumental in achieving this result.

This case underscores the critical importance of expert negotiation and strategic financial assessment in debt settlement cases. By effectively communicating the clients’ financial reality and the risks of bankruptcy, we were able to secure a favourable outcome that not only alleviated their financial burden but also provided peace of mind.

Key Takeaway

If you or someone you know is facing similar financial challenges, don’t navigate these complex situations alone. Our team are here to provide tailored solutions that protect your interests and help you achieve the best possible outcome. Contact us today for a free case review on 0330 159 5820 or email us at [email protected]

PS…Don’t forget to download our free client portfolio guide to see how we have helped others achieve long-lasting commercial resolutions, click here.