How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Alex J. Your Own Question
Alex J.
Alex J., Litigator
Category: UK Law
Satisfied Customers: 3497
Experience:  LLB, LPC, DELF
13113900
Type Your UK Law Question Here...
Alex J. is online now
A new question is answered every 9 seconds

We started a business - limited company - back in 1991 with

Customer Question

Hi, we started a business - limited company - back in 1991 with a 25 year lease, however following a much increased rent review back in 2008 we decided to close and took out a 10 year loan with the bank - Lloyds Tsb- to pay off our facility, the bank agreed to the loan fully aware the business was no longer trading - when Lloyds split from Tsb in Sept 2013 our account was passed on to Securities Dept as they became aware the company was no longer trading , but still active on Companies House and we had not defaulted on any payments, we also had an overdraft acoustic which we successfully renewed every 12 months with Lloyds Tsb. In January 2014 the bank froze our account and we could not make any further payments, they sorted charging us unauthorised interest. We tried to settle and made 2 offers but they first wanted the Directors to declare all their assets by filling in ALIE forms which they refused as we were concerned the bank could put a charge on - thebank holds personal Guarnatees limited to £44k for each director - we have failed to negotiate and in May 2015 decided to strike the company off to try and get a response from Tsb -,they are now in the process of trying to enforce the guarantees, however do not have a copy of the original loan agreement made in 2008 which was signed in the bank - unfortunately we did not receive a copy so cannot check the original T&C's - we are not disputing the fact we have the loan, but the legality of enforcing the guarantee have the way the bank had treated us, your opinion would be greatly appreciated. Thank you.
Submitted: 9 months ago.
Category: UK Law
Expert:  Alex J. replied 9 months ago.

Hi Thank you for your question and welcome. My name is ***** ***** I will assist you. Does the guarantee contain a definition of the secured liabilities? Kind regards AJ

Customer: replied 9 months ago.
Hi, thank you for your response - please find attached a copy of the guarantee.
Expert:  Alex J. replied 9 months ago.

Hi Thank you - I will review this now and revert to you as soon as possible.

Kind regards AJ

Customer: replied 9 months ago.
Many thanks.
Expert:  Alex J. replied 9 months ago.

Hi, Thank you. I have reviewed this and understand the situation as follows - you guaranteed a fixed sum up to £44k, if the bank cannot recover money it is owed from your limited company. The bank cannot currently prove it is owed any money by the company as the original underlying agreement has been lost. Does the company have any statements that show its indebtedness? Is the bank claiming the full £44k?

Customer: replied 9 months ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 9 months ago.
The bank statements are on the last file I sent and they are looking to enforce the full guarantee amount - should you wish to contact me to discuss anything my number is ***** - thank you.
Expert:  Alex J. replied 9 months ago.

Hi, Is the amount owed more or less than £44k? Technically you should be able to ask the directors for a contribution if the amount is less than the full amount guaranteed by all the company directors.

Customer: replied 9 months ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  Alex J. replied 9 months ago.

Hi, Thank you. Technically your argument is that as they cannot prove the indebtedness of the company, your guarantee is guaranteeing liabilities that do not exist. Are you negotiating with the other directors collectively or by yourself?

Customer: replied 9 months ago.
Thank you for your reply, we are negotiating with the second director who is a family member.
Expert:  Alex J. replied 9 months ago.

Hi, Thank you. Have you tried to convince the bank to take a cut on what you have to repay based on what you can afford? Have you disclosed your financial means to the bank to try and demonstrate what you can afford to repay - if they are going to accept a deal it will need to be based on evidence and affordability. You have a greater chance of negotiating a reduction in the loan amount on the basis that the bank is missing paperwork - this would make going to court to prove the guarantee is enforceable conceptually more difficult.

Customer: replied 9 months ago.
We have already made 2 offers back in 2013 when TSB and LLoyds split which were rejected and the account was sent to the Recovery department and frozen - we were unable to continue making the monthly repayments of the loan as they were bouncing back - the bank asked us to fill in Assett and Liability forms which we refused on the advice of our accountant as we were concerned the bank could place a charge over some of the assets and we were informed this is not a legal requirement - we had made regular repayments since the Loan was set up in 2008 with any default - the only reason the bank reacted with Formal Demands is because we struck the company off in June 2015 as we could not reach a settlement and the unauthorized charges kept on accruing at around £1000 per month - so in a way we have instigated the bank to start proceedings, however we do not feel they now have all the correct paperwork.
Expert:  Alex J. replied 9 months ago.

Hi, Thank you. Baring in mind you are on the hook for up to £44k each - how much can they actually prove? Is the last statement more than £44k? I understand if you do not want to risk disclosing your assets and having a charge put on your house or other property, but if you want to settle with the bank you need to convince them a) that they wont be able to enforce the whole guarantee any way, as they wont be able to prove the company (which you have guaranteed) is actually in debt and b) that what you are offering to repay is all you can afford. If you are not prepared to make full disclosure then you would need to focus on challenging the paper work - have you asked them in writing to prove how the debt (that the guarantee relates to) arose?