Directors Personal Guarantee and impending BR

So_Sad_Angel

Tabitha_T wrote: »

Thanks for your advice. I've just gone through the wording carefully and found a section concerning 'Continuing Guarantee' which says "...this guarantee shall continue as security even if the customer's liabilities reduce to nil or fluctuate".

However, I did read somewhere on the forum a while ago that if the bank did not advise you on these guarantees at the time, that they
could be deemed null and void. At the time we did not receive any advice from the bank, a mailing arrived, asking for the form to be signed and returned, which we did, no questions asked - being desperate for the funds to sink into our company at the time was the more pressing matter.

We do already have a fairly hefty chunk of other personal debt that presumably this would be added to in terms of personal BR.

Not sure what to say to the dca involved, whether to give information regarding date of proposed BR or be suitably ambiguous as to its imminent approach?

At the moment, we are making £1 token payments to creditors, so, possibly we could review the forecast and find another £1 per month to offer to the dca. Not sure if that would be a better option to get them off our back in the short term or simply tell them about the BR...

Hi,

When agreeing to a PG you should have been given the option by the Bank to take ILA (Independant Legal Advice) ...the form is sent to your solicitor who will explain the legalities of the PG so that you can then agree/disagree accordingly. If you waive that right then it is down to you & you sign a waiver form.... banks have to have the ILA / waiver before they can open the lending facility.

There have been occasions where ILA was never offered hence there have been cases contested on that basis.

Sounds like you may have agreed to waive that right although there is a slim change that is wasn`t done correctly .....my advice would be to request a copy of the ILA form anyway just to check.

Hope that helps.

the_bright_side

Just been through a similar process with our business and HMRC. Compay is now insolvent and the OR wants money from us from what is being classed as a directors loan. PM me if you want to chat about it

Tabitha_T

Hi So Sad Angel and the bright side, sorry for delay in responding, couldn't get back on the forum until now. Thanks very much for the advice and encouragement :TThe info re the ILA/Waiver/PG is invaluable. I suspected we had never been given enough info, we were certainly never offered advice or signed additional paperwork, it was cobbled together really speedily by our ex-biz banker who was absolutely useless. We used to have to pick him up some days for a meeting as his wife had the car...very professional - not. I shall definitely be requesting that ILA form from the dca, pronto, many thanks!

Bright side, your comments were interesting re the directors loan, fancy we may end up in a similar situation, our accountant intimated something of the sort last year but glossed over it and said things
should be ok, hmmm. Thanks for the PM offer, I feel sure I will be taking you up on that, cheers.

All the best for now, Tabs

Swanseajack

Received a response today - at last - from the dca acting for our bank in regard to our business account. This concerns an overdraft of £5K covered by a Directors' Personal Guarantee which the bank are now enforcing following the collapse of our company. We wrote and requested a copy of the ILA/Waiver form and the bank have come back (via the dca) and stated the following:

"As the loan facility was for less than £25,000 for a Limited Company, an individual Legal Advice (ILA) Waiver is not required. If the company was requesting a greater loan facility over £25,000 then a waiver would be appropriate."

Any comments or experience of this? The dca are now asking for realistic proposals to repay the £5K. I have already told them that there is no money, we are already paying the bank in question £1 per month for two other (personal) accounts. The CASHflow from National Debtline clearly shows there are no more funds available. Do I offer to add in this third (business) account and divvy up the two pounds monthly between three accounts now, or try andscrape another pound together?

Any suggestions appreciated.

billybraggtastic

Tabitha T/Swansea Jack

Your thread has reinforced my own need for action.

I too gave a PG to the bank for my Ltd Co's overdraft. The bank called in the PG and I sent a cheque off for £4k.

Subsequently the Liquidation has paid the bank the monies due and they have returned my cheque. What struck me though was that the bank did not break or end the PG - just simply returned the cheque.

I am suspicious of this and I intend to lookout the original agreement and determine how to remove the PG. It is unlikely that I will be in a situation where I borrow from them again but it would be appropriate to remove the risk.

It looks like you would have needed to have done the same when you had paid off the original OD.

If I find anything of note in my own situation I'll post it up for you.

Good Luck

BBT

Swanseajack

Hi BBT, thanks for your response. Sneaky little beggars aren't they! Luckily, in one respect that me and Tabs won't be doing any more business with the bank in question. All accounts closed and we have moved on. Good luck to you, hope you manage to finally remove the beast, be interested to hear how you get on. All the best, Jack