Articles Comments

Debt Relief – Insolvency – Bankruptcy Information » Insolvency » What happens to bank loans in case the debtor company goes insolvent?

What happens to bank loans in case the debtor company goes insolvent?

I would like to know the fate / process of recovery of bank loans in case the debtor business goes insolvent / bankrupt with particular reference to UK laws. What could be the precautions which a lending banker may take while lending to ensure recovery in case of insolvency / bankruptcy?

RELATED POSTS:

  1. What does it mean if your company is insolvent As the title here suggests, you need to establish whether your company is insolvent if you wish to close it...

  2. My company is insolvent – more clues to insolvency In this ongoing series of articles we have explored indicators that may give clues as to whether your  business is...

  3. Is my business insolvent – This is how you can tell This is one article in a series exploring the myriad of pointers which may indicate that your business is insolvent.The...

  4. Company Voluntary Arrangements Offer Scope for Saving Insolvent Companies Copyright (c) 2010 Alison Withers A CVA (Company Voluntary Arrangement) can be a powerful tool for restructuring the liabilities of...

  5. Helping an Insolvent cleaning or service company restart Right now we are in the process of helping a number of insolvent cleaning and service companies which are in...

Written by

Filed under: Insolvency · Tags: , , , , , , ,

2 Responses to "What happens to bank loans in case the debtor company goes insolvent?"

  1. GetOutofDebt.org says:
    If it is a debt you owe the company, you still owe it. The precaution is good qualification and an appropriate interest rate based on risk to price comparable loans at a rate where the estimation of profit exceeds the estimation of loss. That’s how banks make a profit.
  2. Tomas says:
    Insolvency is defined both in terms of cash flow and in terms of balance sheet in the UK Insolvency Act 1986, Section 123, which reads in part:[1]

    123. Definition of inability to pay debts

    (1) A company is deemed unable to pay its debts – [...]

    (e) if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due. This is known as cash flow insolvency.

    (2) A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities. This is known as balance sheet insolvency.

Leave a Reply

Connect with Facebook

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Not finding what you're looking for?
Do a custom search of our entire site:

Get Adobe Flash player