Business Debt.. discrepancy on the agreement

liquidkristal

I was a director at a company that folded about 1 year ago, myself and the other owner had 2 personal guarantees in place, 1 with HSBC and 1 with a place called Partnership Investment Finance (PIF).

Now they have both called in the debt under the personal guarantees, however HSBC have been rather slow to move and are not really an issue, but PIF are being very aggressive, especialy with the other director as he owns a house. Now they have sent him out a copy of the signature sheet on the agreement, but not the first page with the terms and conditions on it, to show that the debt is owed.

I happen to have a fully copy of the agreement from when it was first set up and it has our company address down as somewhere we have never been (we can prove this via companies house. now the only reason I can think of that the address is wrong is that the loan was only available in specific postcodes for some european regeneration project and the company seting up the loan may have supplied incorrect information on the application to make us "eligable". so with that in mind is the contract enforcable and does the debt stand.

The other issues we had is that in the 1 1/2 years that we had the loan from them they never collected a penny despite us sending off direct debit forms every few months when they noticed that they hadn't collected any cash from us, yet on the paperwork that has been sent to the other director they are gonig after him for the full amount + interest even though it should be substantially less if they had collected on the direct debits as was the plan.

We had a meeting with them today and the outcome was that unless we can get a lump sum of about 15K to them inside 14 days they are going to persue the other director for his house, he can raise some of the cash via unsecured borrowing, I cannot (even though I have higher income I am already at my limit for personal borrowing (personal loans that were put into the business in its final stages to try to get it through the rough patch that eventually killed it)).

now PIF are pushing hard for their cash, and the other director is adament that it is good to get them out of the way that way HSBC will see that they are the only creditor left then and be easier to deal with / will be able to give us a better deal on repayments etc (although I can see them being far harder to deal with and am already looking at the IVA route as servicing current repayments is not a problem, but adding on another 400 ish a month is not feasable)

Any help is appreciated.

StuTheDon

To be honest, I think you will need a lawyer but here are some observations:

1 - I dont think you can claim unenforceability on this on the address issue. Why did you sign the agreement if it had the wrong address on it? Knowingly doing so would compromise yourselves as well as the providor.

2 - With the direct debits. What happened to the money you will have set aside to pay the direct debits? I assume you saved it, even though it was not collected? Why did you not escalate this with the bank/creditor?

I dont think you are going to get out of this one - it sounds like a big mess and may need legal involvement.

Tixy

If the address is wrong on the copy of the agreement you have then you knew it was incorrect all along (or should have known), it won't stop the agreement being enforceable.

If no payments were ever made (regardless of why) then the full amount will still be owed. Whether you could argue that the interest should be slightly less is possible - although I'm not sure you'd really be likely to get anywhere with it, as your business had the benefit of the cash at the time that didn't go to pay the direct debits.

Have you had any professional advice from anywhere with regards to the PGs and your financial situation? Might be worth contacting the businessdebtline to see if they can offer you any free advice.

lawrie28

Did they take a charge over any property?
Having worked in banking, PG's were always considered a nightmare to enforce, hence why charges over property used to be taken.
Were the PG's witnessed properly?
Were the details for the PG's all correct?
Definately get legal advice.
The PG's mean that they will pursue either party to get the funds back, it does not mean that you pay half each. So if the first co go after your bus partner and are successful in making him sell his house (which will be a push) then they won't chase you for the debt (harsh, and unfare I know). Though this may be better personally for you, it won't help the friendship.
What have the company administrators said about the debt situation?

liquidkristal

they haven't taken charge ov er the property yet, although they have started legal proceedings with regard to getting the cash in.

The PG's were witnessed by one of our other directors, and all details for myself and the other director are correct.

The company administrators have been rather quiet on the situation as they beleive there to be a lot of cash still due in (via invoice factoring, although I know that there is nothing left to draw in as the invoices were not backed up or agreed with the client that the work was supposedly carried out for (invoices were produced for work that was not carried out) (Yes I know this is wrong, but I had resigned my position within the company as it was already getting very silly and I wanted to distance myself from it as fast as possible)

Obviously the debt still stands, and after the meeting we had with PIF yesterday the other director is still adament that if PIF are paid off by means of raising cash then it is far easier to deal with 1 creditor (I'm not sure of this). my preferred route is still IVA as that wraps evetything up, admitedly it will leave creditors short but I cannot service the debt levels if they include the business debt.

The other director doesn't see this as all he sees is someone else getting their hands on his house, either by charging order, equity release or some other more extreme method. He is planning on either remortgaging to take advantage of better rates or moving (not sure which) and sees any kind of 3rd party interference as being a big problem (which it probably will be).

I have not sought any legal advice yet as I haven't had that much come at me so to speak (although in a discussion with HSBC where they asked me to pay 300/month for 99 months I told them that was not likely to happen, they just said fine we'll apply for an attachement of earnings and that was that (so IVA time could be sooner rather than later)

ILW

liquidkristal wrote: »

they haven't taken charge ov er the property yet, although they have started legal proceedings with regard to getting the cash in.

The PG's were witnessed by one of our other directors, and all details for myself and the other director are correct.

The company administrators have been rather quiet on the situation as they beleive there to be a lot of cash still due in (via invoice factoring, although I know that there is nothing left to draw in as the invoices were not backed up or agreed with the client that the work was supposedly carried out for (invoices were produced for work that was not carried out) (Yes I know this is wrong, but I had resigned my position within the company as it was already getting very silly and I wanted to distance myself from it as fast as possible)

Obviously the debt still stands, and after the meeting we had with PIF yesterday the other director is still adament that if PIF are paid off by means of raising cash then it is far easier to deal with 1 creditor (I'm not sure of this). my preferred route is still IVA as that wraps evetything up, admitedly it will leave creditors short but I cannot service the debt levels if they include the business debt.

The other director doesn't see this as all he sees is someone else getting their hands on his house, either by charging order, equity release or some other more extreme method. He is planning on either remortgaging to take advantage of better rates or moving (not sure which) and sees any kind of 3rd party interference as being a big problem (which it probably will be).

I have not sought any legal advice yet as I haven't had that much come at me so to speak (although in a discussion with HSBC where they asked me to pay 300/month for 99 months I told them that was not likely to happen, they just said fine we'll apply for an attachement of earnings and that was that (so IVA time could be sooner rather than later)

That sounds like fraud.

liquidkristal

ILW wrote: »

That sounds like fraud.

sadly, thats how silly things were getting (The invoices were raised for work that should have been agreed with the client, but wasn't, now the invoices have not been paid out on from the factoring company so no money has chaged hands on them, but it still happened (I had it on record that I had resigned and filed my director resignation form with companies house before the invoice was produced.)

lawrie28

What where the loans for?

chanz4

lucky your not getting prosecuted, as a director at the time they still can do you.

liquidkristal

lawrie28 wrote: »

What where the loans for?

business expansion (was all just before the banks collapsed), so very bad timing / luck at that point

liquidkristal

chanz4 wrote: »

lucky your not getting prosecuted, as a director at the time they still can do you.

I was off the list so to speak before the invoice bit, but yes I'm aware that could happen.