HSBC and liquidated company, can I claim?

[ZENTRIX9]

heres a quick overview of what happened.

 

Family business trading for approx 26 years, my father dies and I have to take over the business.

 

I become director, my mom MD.

To continue trading we need an overdraft as we are putting our own money into the account.

We sign a joint and several personal guarantee for £20k.

 

The bank manager then talks us into invoice finance and we sign up with HSBC invoice finance a seperate company we are told and also our sister company.

 

After going live with it we have to put the company into liquidation approx 7 - 8 weeks after as we have no cash flow to continue trading.

 

We had personal accounts with HSBC, my mom received a letter on the Saturday saying they were taking £20k from her account on Monday, they actually took it the day before she got the letter!

 

They also linked the 2 companies with the invoice financing and the sister company had to pay £10k to HSBC invoice finance.

There were more than enough funds outstaning to cover the £10k but they couldnt be bothered to chase it now the company was in liquidation.

 

I believe that we were treated unfairly and that we were pushed into the invoice financing and it was not in our best interest to do so. I also think we were stitched up with the 2 companies being linked together as we thought that we were signing seperately for each company.

 

The company has been liquidated now and has left me with a lot of debt and my mom £20k less in her account.

Can anyone advise wether I can put in a claim for bank charges, unfair trading etc

 

I honestly think that if the bank manager hadnt badgered me into the invoice financing then we would still be trading today.

 

If the guarantee was a personal one on a ltd company overdraft would the loan become a personal one and not a business one and covered by the Consumer Credit Act?

Are they allowed to just take the money from my moms personal account?

 

Could we sue to get the money back or any other monies owed we can claim for.

[Ibsys]

You should have cover for legal advice in your Public Liability insurance.

 

It is only telephone advice but when I was with AXA, they used "Capita" advisers and they were good. I don't think the two companies can be linked.

[ZENTRIX9]

Thanks Ibsys, can I still contact them even though the PL has expired?

[elsinore]

After going live with it we have to put the company into liquidation approx 7 - 8 weeks after as we have no cash flow to continue trading.

 

Hi ZENTRIX,

 

Are you suggesting that the actions of the invoice finance company affected your cash flow, or that you suffered a downturn in business leading to cash flow problems?

 

Els

[ZENTRIX9]

Hi Els, I think that their actions affected the cash flow,

they were heavy handed with customers and witheld some monies due.

 

it was all explained to us when their representative came to see us and it sounded great,

but in practice, lots of things they told us didnt work how they explained it.

 

At the time work had levelled out a bit and was constant.

 

We did work for a lot of regular customers and housing associations and had been trading a long time.

 

Architects came to us based on past work and wouldnt use other contractors because we always delivered.

[Ibsys]

Thanks Ibsys, can I still contact them even though the PL has expired?

 

From what you say,you have a sister company, I would be of a mind to ask your "legal helpline" with your insurance attached to your sister company but if the two companies were insured on the same policy, as the incident had happened whilst covered it may be worth a call.

 

However, I am a member of the FSB for £140 per year and I am covered by this advice line as well. Perhaps an option.

 

You could say the factors being too heavy handed was diminishing repeat business, withholding fund being another. Factoring should be an improvement to cash flow but not if they allienate customers, can't get money in then backcharge your drawdowns.

[elsinore]

Well, that's what I hoped you would say but the difficult bit will be to prove it.

 

Also, I have no doubt that the bank manager gave you a list of half a dozen invoice finance companies from which you could make a free and independent choice.

 

I'll come back later on with some more questions and suggestions.

 

Els

[ZENTRIX9]

From what you say,you have a sister company, I would be of a mind to ask your "legal helpline" with yoru insurance attached to your sister company but if the two companies were insured on the same policy, as the incident had happened whilst covered it may be worth a call.However, I am a member of the FSB for £140 per year and I am covered by this advice line as well. Perhaps an option.You could say the factors being too heavy handed was diminishing repeat business, withholding fund being another. Factoring should be an improvement to cash flow but not if they allienate customers, can't get money in then backcharge your drawdowns.

 

To be honest the sister company had to pay £10k to the invoice finance.

 

the supplier of the roofing bars we used also supplied us with bar length for the liquidated company.

 

They then made it impossible to trade with them demanding money up front and wanted us to pay what the liquidated company owed.

 

This finished us off as when we tried to swap to another supplier they wouldnt touch us, we know for a fact that our supplier had told them not to as they intertraded between each other.

 

Well, that's what I hoped you would say but the difficult bit will be to prove it.

 

Also, I have no doubt that the bank manager gave you a list of half a dozen invoice finance companies from which you could make a free and independent choice.

 

I'll come back later on with some more questions and suggestions.

 

Els

 

Oh no, that wouldnt have been in his interest to suggest somene else. They like to push their own even when they say its nothing to do with HSBC, even though they are called HSBC Invoice Finance.

 

Do you think I should send them a SAR to get all the paperwork inc all the personal guarantees?

[Ibsys]

Do you think I should send them a SAR to get all the paperwork inc all the personal guarantees?

 

Send two, one SAR to HSBC and the other SAR to the factor. Have you changed banks? From my understanding of factoring the invoice is raised, sent to the factor for 80% draw down in 24 hours (65% in construction) so the factor should only retain 35% until payment by client, handing over 35% less fee's. What percentage were they withholding? Look at the date on every transaction, invoice, do full accounting, then look at "chain of consequence". Look at a side issue........what is the connection between HSBC Business banking and the factors and what are the commissions..what drove this when a company has traded satisfactorily to years then HSBC prompted the change.

[ZENTRIX9]

Ok I will send a SAR to both. Shall I also register a complaint to the FOS?

We also paid a lot of bank charges over the years, can I still claim that back?

 

With this company being liquidated, if I do get any money back do I keep it or do I have to pay the liquidators and creditors?

 

Yes I have moved banks although I do still have an account with them.

i have also been in touch with the liquidators and have asked them if I can have all the accounts and paperwork back that I gave them and they said yes. This should help a bit.

[steven4064]

Is the invoice financing a sort of insurance scheme? If so, it might be worthwhile looking at the issue of conflict of interest in them selling it to you from a linked company as they effectively acted as agent. Els, what do you think?

[elsinore]

Yes, steven. I had a similar problem with LTSB who insisted I took their Cardnet service without bothering to mention that I could have chosen another, independent merchant service.

 

Shall I also register a complaint to the FOS?

 

We also paid a lot of bank charges over the years, can I still claim that back?

 

With this company being liquidated, if I do get any money back do I keep it or do I have to pay the liquidators and creditors?

 

 

It all depends on who claims what. As the business was a limited company, it would normally be for the company to claim (or the liquidators on its behalf) and any monies recovered would go towards paying the creditors (or the liquidators fees!).

 

For you to benefit in any way, you would have to demonstrate, with proof, that the actions of the bank and their tame invoice finance company, affected the company in such a way that you were personally financially disadvantaged. Then you have to quantify that loss in monetary terms.

 

Els

[ZENTRIX9]

Els, would that cover the £20k they took from my moms account? Personally financially disadvantaged.

[elsinore]

Yes but mom would either have to make a claim on her own behalf or be a joint claimant with you.

 

The biggest hurdle is the directors guarantee.

 

Do you have a copy?

 

If not, and if you have not yet sent the SAR, make sure that you specify that item in your request.

 

Banks can be coy about supplying some items, especially if they suspect that doing so might harm them!

 

Els

[ZENTRIX9]

Ok thanks Els. I will be sending the SAR today. If I havent a chance of getting money back personally rather than giving it to the liquidators then I wont bother.

[elsinore]

Understandable.

 

The situation regarding 'right of set off' is perhaps worth looking into. Here's an extract from an FOS article (my underlining):

 

Certain conditions must be met before the firm can exercise its right of "set off".

 

• the account from which the firm transfers funds must be held by the customer who owes the firm money.
  
• the account from which the firm transfers the money – and the account from which the money would otherwise have come – must both be held with the same firm.
  
• the account from which the firm transfers funds – and the account from which the money would otherwise have come – must both be held in the same capacity by the customer concerned. So, for example, if Mrs C holds a savings account in her capacity as treasurer of a local society, the firm cannot take money from that account to pay Mrs C’s personal credit card bill that she normally pays from the current account she holds in a personal capacity.
  
• the debt must be due and payable. For example, if a customer misses making a loan payment, then (at least until it calls in the loan) the firm can take only the missed payment – not the balance of the loan.
  

The FOS of course only deals with consumers with personal accounts, but you might want to ask them if dipping into a personal account to repay a business account is something they would look at.

 

The full article is here http://www.financial-ombudsman.org.uk/publications/ombudsman-news/40/40_setoff.htm

 

The bank might well produce T&Cs (which you will ostensibly have agreed to) giving them the right to do this, but I doubt it.

 

Els

[ZENTRIX9]

Thanks Els I will give them a call tomorrow and see what they say.

Gonna send off 3 more SARs tomorrow for other accounts.

One quick question. Before we moved to HSBC with the business we used to bank with TSB at a local branch. Once we were turning over more than 1 million we were taken over by the business section at Birmingham. They werent as nice, they almost sent us bankrupt. I remember that they came to work and talked to my dad charged him £1000 to up the overdraft then a few days later withdrew it! They hounded him and my dad had a nervous breakdown during the process. My mom found him one night sitting on the bed with a bottle of pills in his hand crying. Family member borrowed him money and we got the business healthy again. Is there a time limit on how far you can go back because I want them to pay for all the heartache they caused to my father and mother during those difficult times. I am talking about roughly 12 - 15 years ago.

[elsinore]

God CENTRIX, I wish we didn't have to read stories like yours but, sadly, they are all too common.

 

The banks will tell you that you can only claim back 6 years, which is an over-simplification. The Limitation Act 1980 states: Where there has been fraud or concealment, or the action is for relief from the consequences of a mistake, time will not run until the fraud, concealment or mistake is discovered or could with reasonable diligence be discovered.

 

However, as far as LTSB is concerned, you have the same problem as outlined in my post 15 above. The damage was done to the company, so it would be for the company to seek redress, unless you can prove that the bank's actions were to your and/or your mom's financial detriment and file a claim in your own name.

 

If the SARs are all for accounts with HSBC, then you only need to send one SAR specifying all the account numbers. Then you only need to send 1 x £10.

 

Els

[Ibsys]

Ok I will send a SAR to both. Shall I also register a complaint to the FOS?

We also paid a lot of bank charges over the years, can I still claim that back?

 

With this company being liquidated, if I do get any money back do I keep it or do I have to pay the liquidators and creditors?

 

Yes I have moved banks although I do still have an account with them.

i have also been in touch with the liquidators and have asked them if I can have all the accounts and paperwork back that I gave them and they said yes. This should help a bit.

 

I am not confident in the FOS, they are a waste of time, do not consider all information and take ages as well. Was the sister company in the loop as well? Did it have to pay the factor £10,000 for the liqudated company? Was the factor contract a seperate contract because if it was, the sister company should not be liable for the payment to the factor on behalf of the liquidated company.

[Ibsys]

Is the invoice financing a sort of insurance scheme? If so, it might be worthwhile looking at the issue of conflict of interest in them selling it to you from a linked company as they effectively acted as agent. Els, what do you think?

 

Invoice financing is not an insurance scheme, it allows the supplier to get 80% of the invoiced amounts within 24 hours, interest is charged on what money is drawn down from when it is used to when the customer pays. There is also a fee for the service. The get an understanding of this look at http://www.bibby.com. They are a shipping firm but they are also the biggest factor service in the country.I think what you were wondering is was the product missold? Yes, it probably was as the bank would have a cut so there is a bias there. The key to saving the sister company is to seperate the factoring contract from the liquidated company if they are connected but if the factor contract is with the two companies seperately, then the £10,000 payment on behalf of the liqudated company should be reclaimed as I see it.Also beware, liquidation is big business these days. Not always in the companies best interest. I would look to back charge it to the bank.

[ZENTRIX9]

I am not confident in the FOS, they are a waste of time, do not consider all information and take ages as well. Was the sister company in the loop as well? Did it have to pay the factor £10,000 for the liqudated company? Was the factor contract a seperate contract because if it was, the sister company should not be liable for the payment to the factor on behalf of the liquidated company.

 

Thanks Ibsys, I think they were seperate contracts that we signed but when I get the SAR back I will know for definate. As I remenber they held us to ransom, not giving us any more money until we agreed to pay.

[ZENTRIX9]

Ibsys, can I still "charge back" the £10k back from the factors even if the company has ceased trading (not liquidated)

[ZENTRIX9]

God CENTRIX, I wish we didn't have to read stories like yours but, sadly, they are all too common.

 

The banks will tell you that you can only claim back 6 years, which is an over-simplification. The Limitation Act 1980 states: Where there has been fraud or concealment, or the action is for relief from the consequences of a mistake, time will not run until the fraud, concealment or mistake is discovered or could with reasonable diligence be discovered.

 

However, as far as LTSB is concerned, you have the same problem as outlined in my post 15 above. The damage was done to the company, so it would be for the company to seek redress, unless you can prove that the bank's actions were to your and/or your mom's financial detriment and file a claim in your own name.

 

If the SARs are all for accounts with HSBC, then you only need to send one SAR specifying all the account numbers. Then you only need to send 1 x £10.

 

Els

 

Els, financial detriment, would this include putting all the money you have into the business and borrowing over £60k from friends and family to keep the business going, selling your car to pay the wages etc?

[elsinore]

Els, financial detriment, would this include putting all the money you have into the business and borrowing over £60k from friends and family to keep the business going, selling your car to pay the wages etc?

 

Sorry ZENTRIX, busy day!

 

No, putting it bluntly, nobody forced you. You invested in the business and it failed (it happened to me, too). Perhaps if the business was still active, it could make a case, but that won't recompense you and your mother.

 

I rather meant any action the bank took which you can prove caused you actual personal loss, e.g. the sum the bank filched from mom's account.

 

I don't think you should do anything until you have the records back from your liquidator and the information from the SARs.

 

Els

[ZENTRIX9]

Quick update, HSBC Invoice Finance has tried to telephone me regarding the SAR I sent, I dont answer the phone so they got my work email from somewhere? They said in the email "I have been trying to make contact with you recently regarding your letter to HSBC Invoice Finance (UK) Ltd" I wonder why, any ideas? I will know more later today. Do you think that they are trying to put me off and not send the SAR or they are worried I might be onto them doing something underhand? We will see