From Overwhelmed to Reassured: How We Helped a Business Owner Save £95,000 and Protect His Home

No director starts a business expecting it to end in personal stress and confusion. Yet, when a company enters liquidation, the chain reaction that follows can feel unsettlingly personal, especially when liabilities surface that no one warned you about.

This is what happened to the director of a small transport refrigeration engineering firm that collapsed in mid-2025.

Our client had always believed the company’s affairs were in order. But soon after the liquidation began, the liquidator requested property valuations, mortgage statements, and details of his personal finances. Only then did he discover he had a significant overdrawn director’s loan account (ODLA) – a liability he’d never been properly advised about.

Overdrawn Directors’ Loan Accounts (ODLAs) carry serious and often misunderstood risks. If the balance isn’t repaid within nine months and one day of the company’s year-end, HMRC can impose a 33.75% Section 455 tax charge. However, in liquidation, the immediate threat is the Liquidator demanding the full repayment of these funds as a debt owed to the company.

In a formal insolvency scenario, the liquidator is required to investigate director conduct. An overdrawn loan is treated as money owed back to the company, leaving the director personally liable, exposed to legal action with the potential loss of assets, or even bankruptcy looming over them.

Overdrawn Directors Loan Debt

At first, our client believed his overdrawn director’s loan account (ODLA) sat at roughly £54,000. But when the liquidator completed their review, the final figure was £165,000. As alarming as that sounds, such increases are common. Liquidators often reclassify past dividends as “illegal” where a company lacked the distributable reserves to issue them, instantly inflating the debt owed back to the business.

With no prior guidance on these rules, the director suddenly faced a six-figure personal liability he never expected.

Mismanaging a director’s loan account doesn’t just create financial exposure; it can also put a director at risk of disqualification. In this case, unclear distinctions between salary, dividends, and loans meant the director had unintentionally taken funds in ways that breached the regulations. Over the years, he had also drawn money to support family members during difficult times, well-intentioned decisions that now carried serious consequences.

Confronted with a potential loss of his home and no clear path forward, he turned to Bell & Company for help.

Understanding the True Picture

The liquidator initially assumed the director was capable of repaying the full amount. Their conclusion was based largely on headline figures: apparent equity in his property and the fact that he had started a new business. However, once we carried out a full review, it became clear that this assessment did not reflect our client’s actual financial position.

His property was jointly owned, meaning only a portion of the equity was his to rely on. A second charge further reduced the usable value. His age and the physical nature of his trade limited his long-term earning potential, and obtaining new borrowing or a remortgage would have been both difficult and expensive given his circumstances.

Taken together, these realities showed that his true repayment ability was significantly lower than the liquidator had assumed.

Our Strategy: Negotiate, Reduce, Protect

Once the director appointed us, our approach centred on three key priorities:

• Immediate protection
  We took over all communication with the liquidator, giving the director crucial breathing room and up to six months’ protection from increasing pressure. This allowed him to focus on running his new business without constant distraction.

• Rebuilding the affordability picture
  We prepared a comprehensive, evidence-led assessment of his true financial position, taking into account joint ownership, reduced equity, outstanding liabilities, realistic living costs, and the limits of his earning capacity. This robust analysis enabled us to challenge the liquidator’s assumption that full repayment was achievable.

• Creating a sustainable settlement pathway
  We guided the director through securing his redundancy entitlement, reviewing potential secured borrowing options, and shaping a practical settlement plan. At every stage, we ensured his home remained protected.

Together, these steps formed a strong foundation for negotiating a reduced, fair, and achievable full-and-final settlement.

The Outcome: £95,000 Saved (58% Reduction)

Through targeted negotiation and a detailed financial case, we secured a £70,000 settlement against the liquidator’s £165,000 claim – a £95,000 reduction, representing a 58% saving.

But the significance of the outcome went far beyond the headline figure. The settlement meant the director avoided bankruptcy, protected his home from repossession, and escaped long-term financial instability. Just as crucially, it brought an end to the legal pressure that had dominated his life for months, allowing him to finally focus on rebuilding his future.

At the end of the process, he described feeling “relieved,” a simple but powerful word after months of fear, uncertainty, and overwhelming pressure.

The Bottom Line:

• Liquidator Claim: £165,000
• Settlement Agreed: £70,000
• Total Saving: £95,000 (58%)
• Timeline: 4 Months
• Outcome: Home Protected, Bankruptcy Avoided

A Human Story with a Strategic Solution

This case was about more than reducing a debt. It was about supporting someone who had spent years working hard, caring for family, and trying to rebuild after a business failure – yet suddenly found himself at risk of losing everything because of poor advice and an unexpected liability.

His experience is not unique. With liquidators increasingly pursuing ODLAs, more directors are discovering liabilities they were never warned about. Many are left frightened, overwhelmed, and unsure where to turn.

This case shows what the right intervention can achieve. With expert guidance, empathetic support, and strong negotiation, even the most daunting situations can become manageable and structured, protecting homes, livelihoods, and long-term wellbeing.

If you’re facing an ODLA demand, contact Bell & Company for an accurate assessment of your true liability. Call 0333 305 4331 for a free, confidential strategy review.

** The case study above is based on a real client scenario from 2025. Names have been omitted for confidentiality. Insolvency outcomes depend on individual financial circumstances, asset values, and negotiation; past results do not guarantee future settlements.