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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 69359
Experience:  Over 5 years in practice
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Hi I am currently pulling my hair out over an issue that appears

Customer Question

Hi
I am currently pulling my hair out over an issue that appears to be coming to a head in 4 weeks time and it is making me ill thinking about the consequences. Roughly 2 years ago I was a director of a small company. Unfortunately it became apparent I was being used to fund the company so resigned as a director over 18 months ago. I had signed as a guarantor of a £25K overdraft along with 2 other directors. The company has since stopped trading, although still exists, after 'transferring' its business to another limited company setup by one of the directors at the time. The overdraft still exists that I am a guarantor of and the bank will not speak to me about it. I now know that the directors of the company applied for it to be struck off at Companies House back in April. As a shareholder of the company I was not informed of this action, neither was the bank apparently as they don't seem bothered by this. I am also owed money personally and through another limited company of mine.
That's the background in a nutshell. My question is ..... as I am still a guarantor of the overdraft and nobody will release me from that, what happens to the overdraft in 4 weeks time when the company is struck off ?
Any help is greatly appreciated as we have paid a solicitor £4K over the past 12 months and got absolutely nowhere.
Submitted: 3 years ago.
Category: Law
Expert:  Jo C. replied 3 years ago.
HI.

Thank you for your question . My name is Jo and I will try to help with this.

Are you asking if you are liable to pay please?
Customer: replied 3 years ago.

Hi Jo
Thank you for your reply.


Currently I want to know what will happen to the overdraft in 4 weeks when the company is struck off ? As one of the 3 guarantors, the other 2 being current directors, will I be liable to pay the day after it is struck off ?


As far as I understand there have been a number of criminal acts committed by the directors applying to have the company struck off by not informing me (or my wife) as shareholders, and by not clearing its debts (the overdraft to the bank, an agreed offer to 'pay us off' through the solicitor and a loan from my other limited company).
Thanks
Darren

Expert:  Jo C. replied 3 years ago.
Thanks.

Can I presume that you guaranteed this loan personally when you say you guaranteed as a director?
Customer: replied 3 years ago.

Hi
Yes you are correct .... it was an overdraft of £25K on the companies bank account that was personally guaranteed by myself and 2 other directors.


What also came to the light is the key director (MD) was banned from being a director at the time so didn't sign this ..... and has a history of this kind of behaviour. We have had nothing to do with the company for 18 months now.


Thanks

Expert:  Jo C. replied 3 years ago.
Sorry for the delay. This dropped off my question list.

I will just type out an answer if thats OK?
Customer: replied 3 years ago.

Thank you

Expert:  Jo C. replied 3 years ago.
Thanks for the information.

If you are saying that you have offer a personal guarantee for this company's debts then they could rely upon that. The fault that the company is defunct matters not from that point of view. If there is a personal guarantee ten there is a personal guarantee and they can claim upon it.

If they do then you could offer a less sum in full and final payment. They will go a long way before refusing that.

In terms of what action can be taken against them, it does sound as though there is an argument that they have misbehaved. Transferring assets its likely to be a contravention.

More importantly though, the effect of that is that you could try to recover by suing the other parties essentially on the basis that the company was deliberately struck off despite having asset that would pya.

Can I clarify anything else for you?

Jo
Customer: replied 3 years ago.

Hi Jo


Thank you. So is there any advantage to us objecting to the company being struck off based on the fact we haven't been informed, and are owed money both personally & to our limited company ?


Ultimately we want to be removed as a guarantor, which they know but are refusing to do so because they know they also owe us money, so are using the guarantor as a weapon against us.


Darren

Expert:  Jo C. replied 3 years ago.
Thank you.

1 You can do that but it doesn't do anything about their capacity to pursue you as a guarantor even if you succeed.

2 Yes, I do realise that is the goal but I'm afraid that if you've guaranteed a loan personally you cannot bail out in the middle of it. A guarantee is the most altruistic contract you can enter. You get almost nothing from it. Unfortunately all you can do at this stage is seek to recover any losses under the guarantee from the relevant parties. Unless the creditor will agree to you being released which is not likely there is no way of achieving it effectively.

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