Personal Guarantee and Transferability

dsgg10

Ltd company, formed 2010 (3 Directors) > 1 Director (me) by 2018 > Finally Insolvent 9 months ago.

Back in 2010 we took a loan with a high street bank. Required a PG (for me unsecured) to be signed by all directors. 
By 2015 loan was repaid, but the company also had an overdraft with said bank. Also had a company credit card
By 2021 took bounceback loan through the same bank to try and keep the company afloat 
By Mid 2022, finally had to admit defeat and call in the IP.

So after 9 months the bank have decided that either I (or even the 3 original) directors are personally liable for the O/D - even though the actual loan was repaid years earlier.

Essentially boils down to a phrase in the original loan - "Customer's Liabilities: means all money and liabilities of whatever nature now or at any time in the future due, owing or incurred from or by the Customer to the Bank anywhere and in any way, whether alone or jointly with anyone else, including:

(i) interest, commission and banking charges now or at any time in the future due or owing from or by the Customer to the Bank; and

(ii) legal and other costs, charges and expenses (including Value Added Tax on such items or any similar tax) incurred by the Bank in obtaining or reasonably attempting to obtain payment of the Customer’s Liabilities by the Customer;"

So it seems, with hindsight, that we "all 3 original directors" should have written to the bank to be released from the PG once the loan was paid. We didn't but hopefully valuable to someone reading this

The PG limit is actually close to the O/D when insolvent, £15K, and the bank now want me (and including my partners income) to create a payment plan (if I can or wont, they will go after the other two original directors!!)... What should I do here, just accept that I will have to pay a plan 
    
They also suggest they are open to an offer... I don't have any savings it all went into trying to keep the company going, but my partner might consider it (but is irked that they want that income declared) - if we did go this route typically what will they likely accept 

my final concern is that once we make any payments on the O/D debt, they will use the wooly PG to try and reclaim the BBL and Credit Card debts too

Any advice gratefully received   
     

sourcrates

Just because they deem you to be liable doesn't mean that much to be honest, just because those terms applied to your loan, does not mean they legally apply to the overdraft as well, or any other of the financial products the company had, that is just what the bank have chosen to interpret the terms as meaning.

The loan, overdraft and credit card were all separate financial products, one agreement cannot possibly apply to all three.

I would say you need legal advice, maybe try the Legal Beagles website.

Debt purchasing companies try this trick with consumer credit debts all the time, they bunch together separate debts belonging to the same debtor, (why I don`t know) then try and claim that the agreement for one of those debts now applies to the new debt, which of course it doesn't, all it does is render the new debt unenforceable.

I`m not saying yours is unenforceable, but a good solicitor could rip this claim to shreds in court.

dsgg10

Thank you so much @sourcrates - This was my original position too and why I raised a complaint with them, me suggesting that this wasn't transferable. They rejected the complaint on the basis of the above, but stated we could appeal to the ombudsmen. Following your advice I am tempted to just go get legal advice first / as well.

Do you have a view on them asking, for my OHs income & assets regarding any potential affordability conversation. I don't see why her income and assets are legally relevant, though we live together we don't have any jointly owned assets (including property).

Finally, and thanks again, do you have any insight on how they calculate what they are prepared to accept - I am assuming its a risk profile of bird in the hand v two in the bush scenario for them - better to have X now than risk never getting Y but I don't know how close to the 15K they would even consider?

That said, Id prefer the zero route and will seek the legal advice, but would be good to be better informed         

sourcrates

Well they can ask you whatever they want, and you are equally entitled to ignore them, or answer at your own discretion, budgeting is usually a family affair, which is why they ask you in the first place.

Affordability is key to all things financial right now, if your budget shows that £1 a week is all you can afford, then that is what they will have to accept.

Keep in mind the courts use the same affordability principle, so taking legal action against you would not improve their position in any way, shape or form.

If you were considering a full and final settlement offer, then again, it’s a matter of negotiation between you.

I can’t really comment on what they would accept though, also you should exhaust the complaint’s process first by escalating the matter to the ombudsman.

flipflopflo

https://legalbeagles.info/forums/forum/money-debt

Annisele

sourcrates said:

I can’t really comment on what they would accept though, also you should exhaust the complaint’s process first by escalating the matter to the ombudsman.

It might not be possible to take this to the ombudsman. Its website says (if you scroll down quite a bit):

I’m a guarantor for my business loan

You may be able to bring your complaint to us if your business is a micro-enterprise or small business.

However, for a guarantee or security you gave personally for your business (for example not one business guaranteeing the loan of another business), you can only bring your complaint to us if it was given on or after 1 April 2019.

If you have given a guarantee for a loan which relates to another individual or someone else’s business, please see our information about guarantor loans.

In other words, so far as the ombudsman is concerned people who have given guarantees for their own business are in a different position to people who have provided a guarantee for somebody else's business. For a fuller explanation of why that is, see page 19 of the FCA's Policy Statement PS18/21.

Unfortunately I'm not as confident as @sourcrates that the guarantee will turn out to be unenforceable. Certainly it might be unenforceable, but it's arguable that the "bunch together separate debts belonging to the same debtor" trick they mention in relation to consumer debts isn't the same kind of thing as an all monies guarantee in a business context. Many of the protections that apply to consumers don't apply to business debts.

I do very much agree that the OP needs advice though.

sourcrates

Annisele said:

sourcrates said:

I can’t really comment on what they would accept though, also you should exhaust the complaint’s process first by escalating the matter to the ombudsman.

It might not be possible to take this to the ombudsman. Its website says (if you scroll down quite a bit):

I’m a guarantor for my business loan

You may be able to bring your complaint to us if your business is a micro-enterprise or small business.

However, for a guarantee or security you gave personally for your business (for example not one business guaranteeing the loan of another business), you can only bring your complaint to us if it was given on or after 1 April 2019.

If you have given a guarantee for a loan which relates to another individual or someone else’s business, please see our information about guarantor loans.

In other words, so far as the ombudsman is concerned people who have given guarantees for their own business are in a different position to people who have provided a guarantee for somebody else's business. For a fuller explanation of why that is, see page 19 of the FCA's Policy Statement PS18/21.

Unfortunately I'm not as confident as @sourcrates that the guarantee will turn out to be unenforceable. Certainly it might be unenforceable, but it's arguable that the "bunch together separate debts belonging to the same debtor" trick they mention in relation to consumer debts isn't the same kind of thing as an all monies guarantee in a business context. Many of the protections that apply to consumers don't apply to business debts.

I do very much agree that the OP needs advice though.

Let me just clarify, I didn`t say the OP should rely on the guarantee being unenforceable.

I recommended legal advice as there "may" be a possibility the terms and conditions were unfair, in that the bank wanted them applied to any and all borrowing.

Ultimately only a court can decide what is fair, and what isn`t.

I do take your point regarding the ombudsman though.