Deed of Release of Debt

This Deed of Release of Debt is a deed that releases a borrower from a debt it owes. A complete waiver of a loan must be contained in a deed and properly witnessed to be valid.

When To Use This Deed of Release of Debt Template

This template is designed primarily for use where both lender and borrower are companies, but it can be adapted where one party is an individual. A typical scenario is where a parent company proposes to write off a debt owed to it by a wholly owned subsidiary.

What This Template Does

It provides for a complete debt write-off (rather than a partial write-off or a waiver of specific terms under the loan agreement).

Directors’ Duties And Corporate Approvals

The directors of both companies should consider their statutory duties under the Companies Act 2006, in particular section 172 (duty to promote the success of the company), when deciding whether writing off the loan is in the best interests of the company. The board will typically want to document this decision at a board meeting.

Shareholder approval is unlikely to be required, but the articles should be checked. Conflict issues may also need to be addressed, particularly for inter-company loans where directors overlap between the lender and borrower. In some cases shareholder approval may be needed to deal with conflicts.

Accounting And Tax Note

Writing off a loan is likely to have accounting and tax implications. This is beyond the scope of this site and you should consider taking appropriate advice.

Land Registry Execution Point

The execution provisions of this template are compliant and consistent with the requirements of the Land Registry for prescribed form deeds introduced from 20 September 2019.

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