[Question] Legal Question: Debt Liability for a foreign national in a South African CC

[Nickolas]

Hi All,

I hope someone can help me, My business partner (50/50) in a locally registered CC is leaving South Africa as he is a foreign national. The problem is we owe Sars money for outstanding VAT payments and the company has no cashflow with little prospect of revenue due to the bottom falling out our industry. What liability will my partner have to repay this debt if he simply leaves the country? Naturally I'm afraid of being left with the debt after my partner has taken the cashflow out of the company through his loan account.

Can anyone please advise me as naturally I don't want to be saddled alone with the CC's tax debt due to my partner scarpering overseas?

We're still in negotiation but at this stage I need to impress upon him that running away from our debt wont work in his favour.

Any help would be greatly appreciated!

Many thanks in advance,
Nickolas

[Dave A]

I need to impress upon him that running away from our debt wont work in his favour.

Unfortunately it probably will.

[Dave A]

I've been chewing this one over (I've suffered enough losses to people skipping the country myself, so I understand your pain). Does your partner have any assets of value in the country?

[Martinco]

I'm afraid of being left with the debt after my partner has taken the cashflow out of the company through his loan account.

Nickolas

Just explain this better......has he already taken the cash against his loan account or does he want to do this when he leaves ? If the latter.......then I cannot see this happening as there is no cash.

[Justloadit]

Debts are usually settled before loan accounts are pulled out. The fact that it was his money in the the first place does not mean that he has no responsibility for the debts. To the contrary, he is responsible to for the debt as a share holder of the CC.

[Nickolas]

Loan accounts CC foreign national

Many Thanks for the replies! It's great to know that in tough times there are people willing to spend time helping.

In answer to the question: Has my partner taken money out?

Yes, his spending habits are roughly three times mine, thereby incurring his debt to his loan account. Tax, as well as outstanding VAT payments, have not been paid and his spending habits have bought our company to the brink of insolvency. Hence the debt to SARS and difficulty in servicing the debt due to no cash flow. He has work several months contract work lined up overseas in a personal capacity, not related to our company.

Due to our history, my feeling is he will not return to help repay the debt to sars, or even to balance the loan account so I can draw my share as dividends out the company. Due to these events, the trust has broken between us, and I want to tie up our affairs before he leaves, even though he commits himself to returning.

The only local asset he has is a car, worth a fraction of the debt he owes.

Many Thanks for your ongoing interest and replies/help thus far!

Nickolas

[Dave A]

Could you get him to sign an acknowledgement of debt for the loan account before he leaves? You'll need a good one that provides for repayment terms and allows summary judgement and attachment of assets/garnishee orders (anywhere in the world) in the event of default.

You should also make an agreement on member remuneration issues while he is not an active, contributing member to the cc "while he is gone."