A partner’s repayment demand needs both a document review and a cash assessment. Establish what is owed and on what terms before moving money.
Corporate Recovery Partners
01 / 06
A personal disagreement becomes a business demand
Two owners fund a small machinery business. After a disagreement, one demands immediate repayment of money recorded as a loan to the company. The other believes it was meant to stay until the business grew. There is enough money in the bank to make a transfer, but much of it is needed for supplier orders already accepted.
Gather the loan agreement, company ledger, bank transfers and messages about repayment. Confirm who advanced the money and which entity received it. A shareholder contribution, company loan and private arrangement between owners may have different consequences.
Ask the accountant to reconcile the balance, including repayments or interest already recorded. Where the terms are disputed or unclear, obtain legal advice rather than selecting the interpretation that suits the bank balance.
Record exactly what has been requested, any deadline and the basis given for immediate repayment. Preserve the original communication. Do not assume that an urgent tone establishes a contractual right, or that a family relationship makes the debt optional.
Check who has authority to respond for the business. Conflicted owners may need separate advice instead of relying on one person to represent both positions.
Prepare a forecast including the proposed payment and existing trading commitments. Business.gov.au recommends accounting for the timing of incoming and outgoing money. Test the effect if customer receipts arrive later than expected.
Take the figures to the accountant and lawyer before preferring an owner-related payment over other obligations. The existence of cash alone does not establish that a particular repayment is appropriate.
If a negotiated schedule is appropriate, identify amounts, dates and the treatment of any disputed balance. Have the agreement reviewed and record whether it changes the original loan or resolves other issues.
Keep the business’s operating decisions separate from personal threats or pressure. If there is no agreement, obtain advice on the next process while continuing to preserve records and monitor payment capacity.
