I'm getting pursued personally for debts incurred by my failed limited company.

[Bigdebtor]

After a number of years as a sole trader, on my CA's advice, in order to ramp up turnover (and hopefully profit) without risking any more of my own money I set up two limited companies and for 2-3 years did reasonably well.

 

 

However when the Banks did their foul deeds in 2007/2008 a number of my customers went bust and I lost a lot of money and also lost the critical mass necessary to maintain the level of overheads the companies were then having to support.

 

 

I have tried to trade out of the difficulties

- and even (foolishly) built up huge credit card and overdraft debts

- all of which I knew I would be personally liable for.

 

Earlier this year I had to give up

- as I was effectively trading insolvently and decided to cease trading and apply to Companies House to have both Companies struck off.

 

Just at that point,

Companies House wrote to me and said they were going to strike off one Comapny for late filing of returns unless I filed them by return.

 

 

They advised I didn't need to do anything

but if I did nothing then they would go ahead and strike the Company off.

 

 

Since this was actually what I wanted to happen I did nothing and they did the usual advertising in The Gazette and then the Company was struck off in due course when no creditors objected.

 

For the second Company,

the CA filed the returns just before I suspect the same process would have been followed.

I therefore filled out form DS01 and sent a copy to all creditors.

 

 

True to form HMRC objected - and have currently prevented the company from being struck off. No other creditors objected and I understand I now have to wait 6 more months and then Companies House will repeat the process in the hope of no further objections.

 

Now, totally out of the blue the CA is chasing me personally for the fees still owed to him by both Limited Companies.

He has produced a copy of a "letter of engagement" which has, tucked away in a small pragraph on page 5 of 6, a paragraph stating "in the event of non-paymnent of our fees as a result of liquidation or administration of the company, the undersigned director hereby personally guarantees to meet the balance of unpaid amounts billed by YZ & Co".

 

My queries are:

 

1. There is nothing else in this multi page letter which warns of or refers to this personal guarantee, either on the first page or directly above the part where I had to sign on the final page.

 

 

Even the Banks put in big print a warning that you should sign only if you wish to be bound by this and give advice about seeking independent legal advice before signing.

Does the omission of this make this personal guarantee unenforceable in Scots Law?

 

2. Given the CA had acted as my personal financial adviser, is there not a conflict of interest in him requiring me to sign this - especially given the fact he was the one who advised me to set up limited companies in order to "safely" scale up my business activities and volumes without "being personally liable"?

 

3. I am not sure in any case if the personal guarantee would apply since it states "as a result of liquidation or adminsitration" and I don't think either status applies to either of the two companies.

 

 

One has been struck off by Companies House without any action by me and the Companies House webcheck shows it as "dissolved".

 

 

The other company's webcheck shows "active - proposal to strike off".

in my view neither company has gone into liquidation or administration and there are no assets or funds to pay for liquidators or administrators.

 

4. The "guarantee" says "unpaid amounts billed by YZ and Co".

A few years ago YZ & Co merged with AB & Co

and later bills state "ABYZ & CO"

and more recently just AB & Co.

 

 

I never signed any new guarantees and there is nothing in the letter of engagement I did sign which allows YZ & Co. to assign my contract or my debt to either ABYZ & Co or AB & Co.

 

 

I have also never received any Letter or Deed of Assignment regarding these debts or contracts.

Does this make the guarantee unenforceable in Scotland?

 

5. Does the fact I have some unpaid bills dating back to 2006 from YZ and Co.

Are these debts statute barred in Scotland after 5 years?

Does the fact I was paying a monthly standing order

- so these older bills could be deemed to be partly paid

- go against this argument?

 

6. Is the CA actually allowed to accept either advance payment or payment of outstanding bills by monthly standing order without having a licnece under the Consumer Credit Act?

 

7. Surely if it was that easy to pass liability on to a director every supplier would have a similar term hidden in their terms and conditions?

 

8. A CA is the one person that we should be expected to always act in our best interest and protect us from our own lack of knowledge and experience in such matters.

 

 

Using their own superior knowledge and experience to give their debts effectively some preferred status over other suppliers is surely an unfair contract term.

Does CPUTR 2008 apply given the alleged personal liability?

 

I am now living on a tiny pension and cannot even get job seekers' allowance.

My wife has had to postpone retirement in order to keep a roof ove rour heads until I reach state retirement age in 3 years time and the CA's demands are effectively a year's worth of my current small pension.

 

Hopefully some other CAGGERs may be able to help

- and my experience may give others a timely warning of a totally unexpected personal liabiliy from someone they thought they could trust!

 

BD

[Bigdebtor]

Kurvaface

 

Thanks very much for your promnpt response - and for your tenacity!

 

I think that probably explains why a personal guarantee is not part of every suppliers' T&C's!

 

I have shown in bold above in my first post the only paragraph referring to this which states "the undersigned director hereby personally guarantees" .....

 

The paragraph immediately above my signature states "I confirm that I have read and understood the contents of this letter and agree that it accurately reflects my undersatanding of the services that I have instructed you to provide."

 

There is then my signature and the following wording:

 

Signed: Big Debtor Dated: Xx/XX/200X

For and on behalf of the Board.

 

It therefore looks as if I didn't sign as Big Debtor the (very) natural person?

 

BD!

 

PS - welcome all 13 Guests - what an amazing amount of interest so quickly from those who do not wish to be identified. I wonder why???

[Bigdebtor]

hit the tiangle if you neeed help

 

dx

 

Dx - thanks. Kurvaface is providing some excellent info and 13 guests are clearly enthralled by it all!

[Bigdebtor]

I will have a look for a thread I have seen on here about personal guarantees. There is an interesting situation where a director gives a personal guarantee. If you are signing it as a director, as opposed to as a private individual, then you are providing the guarantee as a director and therefore the persopnal guarantee is unenforceable.

 

I will just go and look for it...

 

I have bounced this theory off several people - but no one else seems to have heard of this potential loop hole in "personal guarantees".

 

Can anyone else confirm Kurvaface's position?

 

BD

[Bigdebtor]

Kurvaface

 

That would be great!

 

Thanks

 

BD

 

PS - I have tried to hit your star to say "thanks" - but nothing happens - not sure why?

[Bigdebtor]

Toddle

 

Thanks - I'll keep you posted.

 

BD