Case Study #023: Restaurant Loan
The client and his best friend, the debtor, had always dreamed of opening a restaurant together. When the opportunity finally presented itself, the debtor asked the client for a loan of SGD $45,000 to cover startup costs. They agreed that the debtor would repay the loan once the restaurant became profitable, but they did not bother drafting any formal agreement. Their trust in each other seemed enough.
Unfortunately, the restaurant struggled to get off the ground, and after a year of losses, the debtor informed the client that he would not be able to repay the loan as agreed. When the client pressed for repayment, the debtor argued that since the business failed, the loan was no longer valid. This left the client feeling betrayed and unsure of how to proceed without destroying their friendship.
The client approached JMS Rogers to handle the situation professionally. The asset recovery team reviewed the case, confirming the loan through bank transfers and emails exchanged between the two friends. JMS Rogers reached out to the debtor, who initially claimed the loan had been an investment in the business rather than a personal loan. However, after reviewing the evidence, the debtor eventually agreed to a repayment plan. The loan was repaid in installments over two years.
This case shows how important it is to have clear, formal agreements in place for financial transactions, even between friends. JMS Rogers helped the client recover his loan while maintaining a respectful approach to his friend’s financial difficulties.
What can we learn from this?
1. Friendship and Business Should Be Separate
When lending money, even to close friends, always formalize the agreement with clear terms. Relying solely on trust can lead to misunderstandings if things go wrong. JMS Rogers can help safeguard your interests while preserving relationships.
2. Verbal Agreements Can Lead to Disputes
Without a written contract, verbal agreements can quickly become “he said, she said” situations. In this case, JMS Rogers leveraged bank records and emails to prove the loan’s intent, ensuring the debt was recognized and recovered.
3. Professional Intervention Prevents Personal Conflict
Turning to a third party like JMS Rogers can help resolve financial disputes without damaging relationships. By handling debt recovery professionally, we ensure repayments are made while keeping personal connections intact.
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