Check the opening balance behind a director loan demand

The latest ledger may start halfway through the story

A liquidator's demand refers to an overdrawn director loan account. The ledger supplied begins with a large opening balance and only a few later transactions. Ask the accountant and your lawyer to examine how that opening figure arose. Do not assume that the latest report proves the entire claim, or that an unexplained opening entry makes the demand invalid.

Identify the reporting boundary

Imagine a company that changed accounting systems two years before liquidation. The new system carries a director loan balance imported from the old software. Record the migration date and ask for the closing ledger from the earlier system. Keep the opening balance separate from later advances, repayments and adjustments so the adviser can see which part of the claim requires historical explanation.

Preserve the source records

business.gov.au recommends secure financial records and backups. Retain the old exports, migration reconciliation and relevant bank statements if available through authorised channels. Work on copies. Do not overwrite the opening balance to match your recollection of what the company owed you. A visible unexplained difference is more useful to the accountant than a revised ledger with no trail of the change.

Source: business.gov.au: Record keeping

Ask about adjustments and classifications

Find the journals or working papers supporting changes to the loan account. In the example, an accountant may have transferred an amount between accounts during year-end work. Ask what evidence supported that entry and when it was made. A ledger description alone does not determine the legal character of a transaction, so provide the explanation and original documents to the lawyer.

Separate factual corrections from legal responses

If the reconciliation identifies an error, quantify it and show the evidence. If records are missing, explain the gap and retrieval efforts. Do not assume another amount owed to you can automatically be set off against the claim. Have the lawyer assess the specific demand, response timing and any appropriate request for further information.

Keep the complete bridge to the claimed amount

The final schedule should connect the historical balance, supported movements and amount now demanded, with unresolved items clearly marked. Retain the calculations used. A transparent bridge from the earlier records to the latest ledger helps the adviser assess the actual claim rather than leaving everyone arguing from an opening figure that has never been explained.