Removing myself as 1 of the guarantors

dee_uk

Help
I recently setup a limted business with my father, but have become very concerned with his spending of the company funds.
To gain these funds with took out 2 loans to which we are both guarantors.
I am in the process of terminating myself as company director and secetary, does anyone if i can remove myself as a guarantor or as i will no longer be a director will i still be liable?????
Also could i draw up a contract signed by my father stating that he would become the sole guarantor for the loans, if i leave the company if he does anything not in the best interests of the company............

ILW

I cannot see that the finance company will let you walk away from your commitment. I would guess the reason they asked for it was because your father did not look too reliable and they want someone to chase if and when the situation you describe arose. You can always ask, but they will probably then want to take a very close look at the books.

sdooley

You'll have more control of the company if you stay on as a director. Are you a shareholder too? Do you have the right under the articles for the company to be wound up? Could you insist on dual signatures on the company accounts?

If you draw up a contract with your father you will only be able to sue him under it; it won't defend you from the bank.

Rafter

If you are that worried, ask the bank to freeze the accounts and wind the company up.

Even a threat to do so might make your father listen to you?

R.

TheGrant

Guarantor's can't be concerned. They need to act because any money being wasted will end up being their debt.

You need to lay down the law with your father. Also remind him of his duties as a company director.

I'd start with some advice from your accountant.

dee_uk

sdooley wrote: »

You'll have more control of the company if you stay on as a director. Are you a shareholder too? Do you have the right under the articles for the company to be wound up? Could you insist on dual signatures on the company accounts?

If you draw up a contract with your father you will only be able to sue him under it; it won't defend you from the bank.

yes i have 50% of the shares, but im assuming that they will go back to the company once my resignation is complete, we do have dual signatures, but he has do be trusted with large amounts of money to purchase equipment and i am not seeing any receipts coming back to the office and am not prepare to take any chances listening to his various excuses.

dee_uk

Thank for the replies guy's but laying down the law isnt working as he comes up with acceptable reason for why he needs the funds, but whether he has actually purchased or just placed deposits which would explain why there are no receipts.
Im guessing if wind up the company i will still be chased for the 2 loans

border_collie

You will have signed for them in a personal capacity. Even if the whole company vanishes you will still be liable.

They are usually joint and several or whatever it is called so if your dad disappeared you would be liable for the whole lot.


If you can persuade your dad to refinance in his name only and repay the debts that you are guarantor for that would be better.

ILW

Please bear in mind that as a director of a limited company you have a legal duty to ensure that all business is being conducted in a right and proper manner. It is no excuse to say your fellow director did not tell you what was going on. I know it is difficult as he is your father but you need to see the books are correct etc. You really cannot have money going out of the company without you knowing where it is going. It seems you may be being railroaded into things that could affect you for years to come.