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Rob, Solicitor
Category: UK Law
Satisfied Customers: 508
Experience:  Policitical Economy BA(hons) Law BA (hons)
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I had a limited company with myself as compnay secretary and

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I had a limited company with myself as compnay secretary and my business partner as Managing director. We borrowed money against our houses from the bank. The agreement with the bank was that we were both jointly and severally liable for the loan, secured by second charges on both our homes. Both of our partners (read wives) signed the agreement with the bank. We put the company into administration during the recession (having lost 70% of our business) The bank is now wanting repayment of the loans (and will not stop the interest whilst it is sorted!) To do this we both should be selling our houses. There is enough equity in my house to pay off the full amount outstanding. We do not have an agreement ourselves6 but both directors and partners( read wives) had 25% of the company shares, so each household holds 50%. The problem is that I have found a buyer, and the bank wish to take all the money from my house and then they do not have to pursue the other director. What can I do?



Unfortunately the bank can just pursue you however you can then pursue your ex partner in accordance with the the Civil Liability (Contributions) Act 1978 see . If your ex partner becomes bankrupt or enters into an IVA as he will technically be a man of straw there will be no real point in pursuing him. If you wish to pursue him and believe he has equity go to a solicitor who may be able to help you put a charge against his property.




Customer: replied 6 years ago.
Hi Rob

Many thanks for your answer.

My business partner has around £70K in equity in his house. The bank have said that they would not release the 2nd charge on his house if.we wished in favour of us as we had "rights of contribution" from him.. If he declared IVA or bankruptcy, would the 1st and 2nd charges on his house be cleared first, ie in favour of the amount he owes the mortgage then us, then leaving his credit cards last? Obviously if not, he declares IVA or bankruptcy and although he loses everything, we lose everything s well!

Many thanks




If he enters into a IVA any secured debt is dealt with separately and remains secured the IVA is only for unsecured debt. Quite often an IVA supervisor places a restriction on the property preventing it from being sold without his consent and therefore he couldn't dispose of the property without the supervisor knowing and the supervisor has a duty to all creditors however your security ranks higher than all the unsecured creditors so you should be ok subject to negative equity.


In a bankruptcy again the banks security will have to be satisfied before any unsecured debtors are paid.





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