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


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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

£50k saved and £7k charges refunded:

MBNA & A&L 35% F&F direct - saved £23k. Birmingham Midshires £1700 charges refunded

Abbey Loan/BCW 50% - saved £2k. Barclaycard/CSL 40% - saved £6k

Monument/DCA 35% - saved £1k. LTSB/Wescot 50% - saved £4k

HBOS Visa £5k charges refund via Blair Oliver Scott

RBS Direct Line/(genuine) solicitors June 2010 40% - saved £3k

Morgan Stanley/Aktiv Kapital £11k SB Nov 2010

Over £40k balance write off and charges refunds to fight for:

HBOS O/d Charges £5k. Egg Loan/Aktiv Kapital CCA Dispute £8k

Egg Card/Fredrickson taking £5 monthly but CCA & Charges Dispute £4k

Goldfish/1st Credit DN/TN Dispute £9k. Capital One/CSL charges claim £4k

Barclaycard/CSL taking £5 monthly on £10k debt

 

I hope I have helped - if I have please hit my star - and recognise the others who have helped too.

Bigdebtor

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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...

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Section 4 of the Statute of Frauds 1677, in force this day and applicable to Guarantee Agreements, the instrument to which the CA asserts you are bound by and seeks to enforce the same, must be evidenced in writing.

 

S4 of the 1677 Act;

 

"No action shall be brought…

whereby to charge the defendant upon any special promise to answer for the debt,

default or miscarriages of another person…

unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised."

 

Should the CA in this case substantiate his claim with the producing of the alleged Guarantee Agreement,

then the matter for the court to decide upon becomes a question of whether such contract was signed by the defendant (you) in the capacity of Director of the Company or signed in his personal capacity,

 

 

if it is found that you signed any such contract as ‘John Smith’ the Director then the claimant cannot succeed to enforce the same against you as ‘John Smith’ the natural person since ‘John Smith’ the natural person did not act as guarantor for the said Company.

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hit the tiangle if you neeed help

 

dx

please don't hit Quote...just type we know what we said earlier..

DCA's view debtors as suckers, marks and mugs

NO DCA has ANY legal powers whatsoever on ANY debt no matter what it's Type

and they

are NOT and can NEVER  be BAILIFFS. even if a debt has been to court..

If everyone stopped blindly paying DCA's Tomorrow, their industry would collapse overnight... 

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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???

£50k saved and £7k charges refunded:

MBNA & A&L 35% F&F direct - saved £23k. Birmingham Midshires £1700 charges refunded

Abbey Loan/BCW 50% - saved £2k. Barclaycard/CSL 40% - saved £6k

Monument/DCA 35% - saved £1k. LTSB/Wescot 50% - saved £4k

HBOS Visa £5k charges refund via Blair Oliver Scott

RBS Direct Line/(genuine) solicitors June 2010 40% - saved £3k

Morgan Stanley/Aktiv Kapital £11k SB Nov 2010

Over £40k balance write off and charges refunds to fight for:

HBOS O/d Charges £5k. Egg Loan/Aktiv Kapital CCA Dispute £8k

Egg Card/Fredrickson taking £5 monthly but CCA & Charges Dispute £4k

Goldfish/1st Credit DN/TN Dispute £9k. Capital One/CSL charges claim £4k

Barclaycard/CSL taking £5 monthly on £10k debt

 

I hope I have helped - if I have please hit my star - and recognise the others who have helped too.

Bigdebtor

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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!

£50k saved and £7k charges refunded:

MBNA & A&L 35% F&F direct - saved £23k. Birmingham Midshires £1700 charges refunded

Abbey Loan/BCW 50% - saved £2k. Barclaycard/CSL 40% - saved £6k

Monument/DCA 35% - saved £1k. LTSB/Wescot 50% - saved £4k

HBOS Visa £5k charges refund via Blair Oliver Scott

RBS Direct Line/(genuine) solicitors June 2010 40% - saved £3k

Morgan Stanley/Aktiv Kapital £11k SB Nov 2010

Over £40k balance write off and charges refunds to fight for:

HBOS O/d Charges £5k. Egg Loan/Aktiv Kapital CCA Dispute £8k

Egg Card/Fredrickson taking £5 monthly but CCA & Charges Dispute £4k

Goldfish/1st Credit DN/TN Dispute £9k. Capital One/CSL charges claim £4k

Barclaycard/CSL taking £5 monthly on £10k debt

 

I hope I have helped - if I have please hit my star - and recognise the others who have helped too.

Bigdebtor

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Me too, I have a chum who signed a personal guarantee for over 40k and the Ltd company long gone which he is paying via Payplan each month. If I can help him with that he'll be delighted.

Cabot and the Cabot Fan Club Threads:

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/73598-dealing-cabot-101-cabot.html

 

Legal Actions Explained for Businesses:

http://www.consumeractiongroup.co.uk/forum/general-debt-issues/20492-legal-actions-explained-company.html

 

Payplan CCCS Advice:

http://consumeractiongroup.co.uk/forum/getting-out-debt/128587-info-cccs-payplan-experiences.html?highlight=Payplan

 

How to use the Forum

http://www.consumeractiongroup.co.uk/forum/welcome-consumer-forums/107001-how-do-i-dummies.html

 

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Do not regard my postings or suggestions as professional advice. If in doubt seek a professional opinion.

 

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I have a question. I run courses and a person attended and I got chatting with him.

He works for the revenue and he helps to liquidate companies. Nice bloke actually.

 

I recently lost my businesses and got wacked by a personal guarantee.

I asked him if the personal guarantee clause was invoked and it was taken from my personal account,

I paid it personally so does it then become a consumer matter and governed by the consumer credit act 1974,

he said he thought that it would.

 

I then said if that is the case can I reclaim all the bank charges back the company paid to get my money back?

he said that he didnt see why I shouldnt be able to.

 

Can anyone clarify this for me.

 

I also told him that my 2 companies were linked together with guarantees (personal and cross company linked) etc by HSBC invoice finance

and that they had witheld all the money from the 1 company still trading until I paid off the amount owing by the liquidated company with funds from the company still trading.

 

i asked him if it was illegal and he said yes. does this mean I can go after HSBC for my money?

 

Any help will be appreciated.

 

Heres ab bit more info about my situation on another thread

http://www.consumeractiongroup.co.uk/forum/showthread.php?305872-HSBC-and-liquidated-company-can-I-claim

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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

£50k saved and £7k charges refunded:

MBNA & A&L 35% F&F direct - saved £23k. Birmingham Midshires £1700 charges refunded

Abbey Loan/BCW 50% - saved £2k. Barclaycard/CSL 40% - saved £6k

Monument/DCA 35% - saved £1k. LTSB/Wescot 50% - saved £4k

HBOS Visa £5k charges refund via Blair Oliver Scott

RBS Direct Line/(genuine) solicitors June 2010 40% - saved £3k

Morgan Stanley/Aktiv Kapital £11k SB Nov 2010

Over £40k balance write off and charges refunds to fight for:

HBOS O/d Charges £5k. Egg Loan/Aktiv Kapital CCA Dispute £8k

Egg Card/Fredrickson taking £5 monthly but CCA & Charges Dispute £4k

Goldfish/1st Credit DN/TN Dispute £9k. Capital One/CSL charges claim £4k

Barclaycard/CSL taking £5 monthly on £10k debt

 

I hope I have helped - if I have please hit my star - and recognise the others who have helped too.

Bigdebtor

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Kurvaface

 

That would be great!

 

Thanks

 

BD

 

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

  • Confused 1

£50k saved and £7k charges refunded:

MBNA & A&L 35% F&F direct - saved £23k. Birmingham Midshires £1700 charges refunded

Abbey Loan/BCW 50% - saved £2k. Barclaycard/CSL 40% - saved £6k

Monument/DCA 35% - saved £1k. LTSB/Wescot 50% - saved £4k

HBOS Visa £5k charges refund via Blair Oliver Scott

RBS Direct Line/(genuine) solicitors June 2010 40% - saved £3k

Morgan Stanley/Aktiv Kapital £11k SB Nov 2010

Over £40k balance write off and charges refunds to fight for:

HBOS O/d Charges £5k. Egg Loan/Aktiv Kapital CCA Dispute £8k

Egg Card/Fredrickson taking £5 monthly but CCA & Charges Dispute £4k

Goldfish/1st Credit DN/TN Dispute £9k. Capital One/CSL charges claim £4k

Barclaycard/CSL taking £5 monthly on £10k debt

 

I hope I have helped - if I have please hit my star - and recognise the others who have helped too.

Bigdebtor

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BD

 

Have just had a look at this thread after our exchange on the other one and I would say you should be fine on this and adapt my posting to suit these circumstances. Also your point 3 about the company not being in Admin or Liqudiation is relevant as your company(s) have not entered into any formal of formal insolvency and therefore this clause is badly worded by the accountant. Point 4 is also relevant. Need any help just shout

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Toddle

 

Thanks - I'll keep you posted.

 

BD

£50k saved and £7k charges refunded:

MBNA & A&L 35% F&F direct - saved £23k. Birmingham Midshires £1700 charges refunded

Abbey Loan/BCW 50% - saved £2k. Barclaycard/CSL 40% - saved £6k

Monument/DCA 35% - saved £1k. LTSB/Wescot 50% - saved £4k

HBOS Visa £5k charges refund via Blair Oliver Scott

RBS Direct Line/(genuine) solicitors June 2010 40% - saved £3k

Morgan Stanley/Aktiv Kapital £11k SB Nov 2010

Over £40k balance write off and charges refunds to fight for:

HBOS O/d Charges £5k. Egg Loan/Aktiv Kapital CCA Dispute £8k

Egg Card/Fredrickson taking £5 monthly but CCA & Charges Dispute £4k

Goldfish/1st Credit DN/TN Dispute £9k. Capital One/CSL charges claim £4k

Barclaycard/CSL taking £5 monthly on £10k debt

 

I hope I have helped - if I have please hit my star - and recognise the others who have helped too.

Bigdebtor

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This thread raises very interesting points for discussion.

And I have recently had the same questions asked by a friend of mine whose business was wound up and the bank are chasing for their money he owes under a personal guarantee.

In this case the original guarantee was used or reconciled to subsequent loans.

He also took out a loan under the GOV guarantee scheme whilst trading with the wound up company.

I think the Gov were guaranteeing 80% of a default.

The bank is now chasing for repayment of the full amount with interest and admin charges.

I cannot believe that the bank have not already got the 80% back-they are denying they have stating that they have a duty to exhaust recovery for the whole amount.

This has been added to the legal charge or pesronal guarantee

Have a happy and prosperous 2013 by avoiiding Payday loans. If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.Before you decide,consider the users here who have already offered help and support.

Advice offered by Martin3030 is not supported by any legal training or qualification.Members are advised to use the services of fully insured legal professionals when needed.

 

 

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they are denying they have stating that they have a duty to exhaust recovery for the whole amount.

 

This is correct they have to exhaust all possible routes to get the money back before they Govt will pay out annd they have to show they have done so as well. Basically the Govt. will only pay out the 75% they guaranteed if the Directors are bust personally or have no assets to which to put a charge over. Obvioulsy Directors aren't told this when they sign up for the SFLG schemes

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This is correct they have to exhaust all possible routes to get the money back before they Govt will pay out annd they have to show they have done so as well. Basically the Govt. will only pay out the 75% they guaranteed if the Directors are bust personally or have no assets to which to put a charge over. Obvioulsy Directors aren't told this when they sign up for the SFLG schemes

 

That's interesting, because in 1983/4 ish I was in a Ltd company we'd set up to sell wooden toys and rocking horses we manufactured with 3 other directors each of which had property as did I. Too many cooks and the thing never worked, but it was set-up with a SFLG loan of 8k. The business failed and there was a 5k deficit (O/D) for which at the time was 80% guaranteed. We never had to pay a penny other than the 20% between us and nobody tried or asked for the 80% money either. Maybe too many companies failing and the rules changed since then, but that was my experience way back then.

Cabot and the Cabot Fan Club Threads:

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/73598-dealing-cabot-101-cabot.html

 

Legal Actions Explained for Businesses:

http://www.consumeractiongroup.co.uk/forum/general-debt-issues/20492-legal-actions-explained-company.html

 

Payplan CCCS Advice:

http://consumeractiongroup.co.uk/forum/getting-out-debt/128587-info-cccs-payplan-experiences.html?highlight=Payplan

 

How to use the Forum

http://www.consumeractiongroup.co.uk/forum/welcome-consumer-forums/107001-how-do-i-dummies.html

 

A click on the scales below is appreciated if my posts were helpful

Do not regard my postings or suggestions as professional advice. If in doubt seek a professional opinion.

 

PLEASE DONATE IF SUCCESSFUL - Every little helps :)

 

PLEASE, Do not Private Message me with basic questions, start your own thread and PM a link if you wish, but I will not be able to respond to all individual questions as I am very busy on numerous other things and anyway, others cannot learn from PM's. It also stifles contributions from the vast talent base this site offers from it's contributors and I'm not all that clever really! :D Thank you.

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