Business OD Personal Guarantee

Marki62

have an 8k personal guarantee on a business OD. This OD was annually renewable, the bank omitted to renew it in 2017 and the business failed due to a fraud by an employee. So the OD effectively ran out in January 2017. The bank have chased me to repay, do they have any legal standing? they also never mentioned I could insure against such contingencies

wavelets

Marki62 wrote: »

have an 8k personal guarantee on a business OD. This OD was annually renewable, the bank omitted to renew it in 2017 and the business failed due to a fraud by an employee. So the OD effectively ran out in January 2017. The bank have chased me to repay, do they have any legal standing? they also never mentioned I could insure against such contingencies

So if I understand you correctly, you gave a personal guarantee to support a loan and the borrower failed to pay it back, and you are wondering if you are liable for it legally? :huh:

Welcome to MSE, btw :hello:

foxy-stoat

Marki62 wrote: »

The bank have chased me to repay, do they have any legal standing?

Yes they have legal standing to chase the guarantor of a loan, not sure what answer you were expecting.

Good luck

MEM62

As far as I know, they are still entitled to pursue you for the balance even though the 'renewal' process had not taken place. Although I would have expected the facility to be withdrawn if the review process was not completed. Given the amount involved it is probably worth you spending a few quid taking proper legal advice. Also, if the business failed due to fraud, what steps have been take to recover the monies that were fraudulently taken? Anything recovered here could reduce the outstanding owed on the overdraft.

In respect of insurance, it is not the banks responsibility to advise you what insurances you business may want or need. It is for those running the business to show the proper diligence in that respect.