Bank Guarantor

tintin_1929

Hi everyone. 

A few years before COVID, I signed as a personal guarantor for a company loan. At that time, I was a shareholder in the company. 

A few years ago, I transferred my shares to the other owners and signed all the documents with solicitors to relinquish my interests in the business. I'm no longer part of that company, any assets or debts it has. 

Recently, I got a letter from the bank 'reminding' me of my obligations as personal guarantor for the company loan. My personal guarantor status should have been removed by the solicitors dealing with the transfer of the shares to the other owners. The new owners should have offered up a suitable way to guarantee the loan with me absent. 

I've contacted the solicitors and they're telling me they can't talk to me as I wasn't the instructing client. They've directed me to speak to the instructing client who is not responding to me. 

I get that they need to speak to the instructing client but I signed paperwork and provided my personal details for them to remove me. So how do I find out what I had signed to? 

I'm thinking SAR. Any other suggestions here? 

Thanks for the help. 

MacPingu1986

Key fact is whether the guarantee was cancelled by the bank as part of the share sale - if it was this would have likely have been via a document directly between you and the bank (or issued unilaterally by the bank) which cancelled the guarantee and your obligations under it. Can you recall if any of these specific discussions took place and do you have copies of the documentation you signed (or if not signed, do you have unsigned drafts?) at the time of the sale? I'd have expected you to have been provided with signed and dated copies of everything that you signed. 

The solicitors acting for the incoming shareholders wouldn't have had any duty or obligation to you to remove the personal guarantee so without you driving the process forward, or making cancellation of the guarantee a condition of you selling your shares, it's possible it was never cancelled.

If you don't have any records and the new owners arn't forthcoming with any information either you could try submitting a SAR although the solicitors might resist and could have some arguable(ish) defenses against any disclosure.

Hoenir

tintin_1929 said:

A few years ago, I transferred my shares to the other owners and signed all the documents with solicitors to relinquish my interests in the business. I'm no longer part of that company, any assets or debts it has. 

Unless you told the solicitors of the existance of the personal guarantee then no action would have been taken. Someone else would have needed to step into your place. Which I suggest would have been unlikely. Personal guarantees are mill stones. 

MattMattMattUK

tintin_1929 said:

A few years before COVID, I signed as a personal guarantor for a company loan.

What was the term of the loan, do you know when it would be fully repaid?

DullGreyGuy

tintin_1929 said:

I've contacted the solicitors and they're telling me they can't talk to me as I wasn't the instructing client. They've directed me to speak to the instructing client who is not responding to me. 

Did you not have your own solicitors acting for you?

Was the guarantee discussed at all or did you just assume it would go once you sold the shares?

tintin_1929

Wow thanks everyone for such a fantastic response! I'll try to answer everything:

1. I believe this was the other owners solicitor that asked me to sign what I signed. I didn't have my own representation as I was assured by the other owners that they would take care of everything.

2. I know the removal of me from the bank guarantee was part of the agreement but I don't remember what I signed.  The bank guarantee was to be honoured by the other owners, not me. I understood they would offer the bank the security they sought to relieve me of it. I never dealt directly with the bank, only with the solicitor. 

3. I am fairly sure I had paperwork but can't seem for the life of me to find it anywhere! Been tearing my hair out. 

4. It was for an overdraft (if I recall) so unfortunately for as long as the overdraft is attached to the company. 

I hope I've answered everyone's questions. 

I just want the solicitor to provide me with what I signed to. I guess the SAR is the only way to go. 

DullGreyGuy

Solicitors etc are partially exempt from data protection laws and so a SAR request may be better aimed at the company or whoever the counterparty to the contract was. Client confidentiality and privileged information concepts would go out the window is anyone could just do a SAR request to a law firm. 

Having not had your own legal representation you are going to have to try and get a copy of the agreement and re-read what it said. It could be that you remain liable to the bank but the new owners guarantee you in return for example. 

retiredbanker1

The only people that that rescind the guarantee is the bank.

If the company is trading profitably and has accounts to back this up they might agree to remove you as guarantor.
In reality this should have been looked at when you transferred the shares - too late now.

If the company is struggling then I'm afraid your chances of being removed are slim unless they find a suitable replacement instead.

Your approach that that solicitors dealing should have done something about this is not really a defence - I'm assuming the company is private with no public register of shareholders - they would not have any knowledge about this.
I feel you should have been more pro active with the bank.
What would I do now? - read the guarantee document - is your liability capped at £x or unlimited to cover any overdraft the company might agree with the bank. If so you need to communicate with both the bank and the newshareholders.

Hope it turns out amicably for you.

HobgoblinBT

Check the wording of the guarantee. If you don’t have a copy you have the right to request a copy from the bank.  You could also request them to advise you of your current liability under the guarantee and copies of any current facility letter that includes your guarantee as security. 

The bank I worked for issued securities documents with an “all monies charge” which means that the security covered all facilities advanced to the borrower. Other banks may have had different terms, ie linking a piece of security to named facilities.  We also insisted that guarantors obtained independent legal advice when signing a personal guarantee if the amount was for £30,000 or more.

The bank I worked for included a clause in the guarantee allowing the guarantor to give notice to terminate the guarantee (might have been 1 or 3 months).  I don’t know if other banks included such a clause.  The danger with this is that the bank may make demand under the guarantee.

I trust that the above information is useful.

retiredbanker1

HobgoblinBT said:

Check the wording of the guarantee. If you don’t have a copy you have the right to request a copy from the bank.  You could also request them to advise you of your current liability under the guarantee and copies of any current facility letter that includes your guarantee as security. 

The bank I worked for issued securities documents with an “all monies charge” which means that the security covered all facilities advanced to the borrower. Other banks may have had different terms, ie linking a piece of security to named facilities.  We also insisted that guarantors obtained independent legal advice when signing a personal guarantee if the amount was for £30,000 or more.

The bank I worked for included a clause in the guarantee allowing the guarantor to give notice to terminate the guarantee (might have been 1 or 3 months).  I don’t know if other banks included such a clause.  The danger with this is that the bank may make demand under the guarantee.

I trust that the above information is useful.

I must have done similar work to HobgoblinBT and agree with first two paragraphs - however the third one is a new one for me - I thought only the bank could terminate the guarantee - indeed any guarantee over say £30,000 would need to be secured ; normally a charge on a property. 

Hoenir

tintin_1929 said:

2. I know the removal of me from the bank guarantee was part of the agreement but I don't remember what I signed.  The bank guarantee was to be honoured by the other owners, not me. I understood they would offer the bank the security they sought to relieve me of it. 

You really need to find that agreement to ascertain what was contractually agreed. Unfortunately words come cheap.