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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 26069
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I have received a letter from a debt recovery company

Resolved Question:

Hi
I have received a letter from a debt recovery company representing a business whom are owed a debt by a company that I set up ( and signed a director's guarantee for ) but I resigned my directorship in January 2017. The debt relates to invoices unpaid from April 2017. The business still owes me a director's loan ITRO £45k, is still trading, is unlikely to record a profit this year and therefore no dividends payable however I am still listed as teh 100% shareholder with Companies House.
Am I still liable as I am no longer an officer of the business?
How do I "cancel" this and any other guarantees going forward?Thank YouSpencer Taylor
Submitted: 1 month ago.
Category: Law
Expert:  Joshua replied 1 month ago.

Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.

May I ask if you notified the company who have benefit of the guarantee of your resignation or that you no longer wished to guarantee liabilities to them?

Customer: replied 1 month ago.
Hi Joshua
They are aware that I resigned as a director; 2 other directors were appointed to "replace" me.
I didn't state that I no longer wished to gurantee liabilities to them ( I took this as a given when I resigned from the company with a company director loan of £45k still owed to me... )Thank you
Expert:  Joshua replied 1 month ago.

Thank you. Are there any conditions attached to your guarantee such as your guarantee will only be effective as long as you are a director?

Customer: replied 1 month ago.
I don't have a copy of the guarantee ( the copy I have been forwarded by Ward Hadaway is ineligible ) so unfortunately I don't know.
Expert:  Joshua replied 1 month ago.

Thank you. This situation is difficult potentially. There is a consderable body of case law in respect of personal guarantees given by directors. The general direction of these decisions is that resigning as a director is not sufficient to end liability under any guarantee unless there is a specific provision in the guarantee that provides that the guarantee is only valid for a period in which you act as a director or officer of the company. Such a condition would be comparatively unusual but it is worth checking the guarantee in detail to ascertain whether such a condition was included.

there is authority to suggest that if you contact the company the benefits from the guaranteed to indicate that you have resigned and do not intend to guarantee any further liabilities under the guarantee, should the company then subsequently increase those liabilities to the company, you would not be bound under the guarantee in respect of those additional liabilities but from what you say, this did not happen in this case.

In terms of going forward, certainly it would be worth you considering contacting the company in writing to advise them that you have resigned as a director and you will not be liable for any further liabilities under the guarantee from the point you resigned though as above, this is unlikely to have effect retrospectively though it can be of effect going forward from this point should be company further increase liabilities to the company relying on on the guarantee.

clearly in respect of any liabilities you incur in respect of the guarantee, you will have an indemnity in this respect from the company that this of course is reliant upon the company remaining solvent and having sufficient funds to repay anything that you pay under the guarantee. Equally it may be possible for you to agree with another director to indemnify you under the guarantee personally though this would seem optimistic.

Ideally you will be able to negotiate payment terms with the creditor which the company can afford to service without making it self reliant upon you. If this is not possible then in default of the above, you may wish to seek some security from the company over any assets it holds in the event that the company subsequently becomes insolvent leaving you holding a bill under the guarantee.

Does the above answer all your questions? If it does, I should be very grateful if you would kindly take a moment to click a rating for my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though

Joshua and other Law Specialists are ready to help you
Customer: replied 1 month ago.
Thanks Joshua.
Not the answer I wanted to hear but certainly the answer I was expecting.Spencer
Expert:  Joshua replied 1 month ago.

I am so sorry not to have been able to give you a better assessment of the position. If I can assist with the above any further please do not hesitate to revert to me.