Directors Personal Guarantee / Account Application Form

[Zignafio]

Hi All,

I have been reading lots of posts on this issue and have been finding it very helpful thus far, but would like some urgent advice on this worrying issue. Any help would be appreciated.

I was a Director and secretary for a Company that I formed in 2006 with 2 partners. In June 2012 we took a hit for nearly 60k on an underground project we were working on, nearly £45k of this was owed to numerous companys who supplied materials etc. for the project.

Anyway, numerous arrangements were made with all suppliers allowing us to continue to trade and therefore pay off the outstanding debt whilst our solicitors dealt with the outstanding debt owing to us.

12 months on with solicitors costs of nearly 10k chasing the original debt. we were forced into making a CVA. Closing the company leaving myself and what was left of my staff completely gutted along with 25k still outstanding from original project.

I had never done anything like this before so was all very new to me, anyway, found a good solicitor paid the money which I had to borrow from the father in law and bobs your uncle, leave it to me, nothing more to worry about now, we will be in touch. kind of thing.

A few weeks in, in December 2013 I received a telephone call at home from the Director of a main supplier telling me, basically he was going to take me to the cleaners as he had a personal guarantee signed by me. I disputed this as I had never signed any personal guarantees to any of my suppliers. He told me it was on the account application form.

A few days later a letter arrived from them confirming our telephone conversation enclosing a copy of the Application for Credit Account. Please see both attached.

I passed a copy of this onto the solicitor dealing with the company closure and was advised not to worry as nothing would come of it, if and when it did we can deal with it then.

Anyway, 6 months to the day I receive a County Court Judgement in the sum of nearly 15k. and am absolutely mortified. My wife is giving birth in 5 days and I am on a morphine high from recent spine surgery so couldn't have come at a worst time really. Financially we have nothing. I had no wages for nearly 14 months before we closed and have been off work since, hence why I had back op that I had been putting off for 8 years.

I had spoken to solicitor again and passed on all information, it now feels like I am being ignored but am rapidly running out of time. In my most recent email I have asked in what capacity he can help me and I am yet to get a reply. I have about 10 days before I need to file a defense and really don’t know where to start.

I have read posts regarding boldness of headings etc. but thought someone may be able to give me some advice thats more specific to my problem.

I Could go on writing forever as is such a complex situation but don’t want to give information that is irrelevant. Please feel free to ask if there is anything you would like to know.

Thank you in advance, we really do appreciate it.

[ims21]

Hi and welcome to CAG.

 

I am afraid that your images are too small to read. Can you please PDF them and use the following method to post them up.

 

**you can post up images/letters by this method immediately..you don't need 10 posts**

.

set your default scan page size to A4 less than 300DPI [150 will do]

scan the required letters/agreements/sheets - as a picture[jpg] file

don't forget you can use a mobile phone or a digital camera too!!

'

BUT......

ENSURE: remove all pers info inc. barcodes etc

but leave all monetary figures and dates.

.

************************* ************************* *******

{DO NOT USE A BIRO OR PEN OR USE SEE THRU TAPE OR LABELS]

************************* ************************* ***********

.

DO IT IN MSPAINT.EXE or any photo editing program

goto one of the many free online pdf converter websites ...

http://freejpgtopdf.com/

http://www.convert-jpg-to-pdf.net/

..

if you have multiple scans/pics

put them in a word doc FIRST and convert that to PDF

or http://www.freepdfconvert.com/

or

use http://www.pdfmerge.com

 

convert existing PC files to PDF [office has an installable print to PDF option]

..

it would be better to upload a multipage pdf if

you have many images too rather than many single pdfs

.

or if you have PDF as an installed printer drive use that

or use word and save as pdf

or use Primo PDF.

.

try and logically name your file so people know what it is.

though DONT USE BANK NAMES or CAGicon in the title

i'e Default notice DDicon-mm-yyyy

.

open a new msg box here

hit go advanced below the msg box

hit manage attachments below that box

hit the add files button on the top right

hit select files, navigate to your file on your pc

hit upload files

...

YOU DONT have to put a link to the attachment in the msg box..just upload it ..job done

you can click on your links to check them too!

.

dx

 

It would also be useful if you could have a read here and provide the answers to the questions posed. Please put your answers here on your thread.

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?419198-You-have-received-a-Claim-What-you-need-to-do.-**UPDATED-April-2014**(1-Viewing)-nbsp

 

I realise that some of the questions will not apply but the more information you can give the better so that legal guys have a good picture of what is going on.

[The Mould]

Agreements of Guarantee are subject to the provisions of the statute of Frauds Act 1677.

 

 

We will require sight of the application form relied on by the Claimant in order to establish as to what capacity you signed the application form.

 

 

Please post up a pdf copy of the application form minus all personal details.

 

 

We also require sight of the Claimants' statement of case (his POC's - particulars of claim).

 

 

Kind regards

 

 

The Mould

[AndyOrch]

Thread moved to the appropriate forum.

 

Andy

[Zignafio]

Thank you all for the quick response and help, i really didnt expect that. I have uploaded the cover letter, application form and the claim form for you to have a look at. I will go through the questions asked shortly and post answers as quickly as possible.

it probably has no relevance, but the form is not in my hand writing which is partly why i dont remember the form but there is also 5 months between it being applied for and being approved.

will update with answers asap. thanks again all, slept well last night.

Edited July 11, 2014 by Zignafio
submitted private info

[The Mould]

Do you have a copy of the Guarantee Agreement for the £30,000.00 credit facility that was approved on 13 January 2010 by the Claimant?

Or, do you have a copy of the correspondence from the Claimant dated 13 January 2010 whereby the Claimant offered and you agreed to a £30,000.00 credit facility in accordance with the terms & conditions of the application form signed by you 5 months previously on 11 August 2009 which contains a signed declaration providing that you agree to undertake to personally discharge the Company’s liability to the Claimant?

Kind regards

The Mould

[Zignafio]

Hi The Mould, I do not have any guarantee agreement, the only document that i appear to have signed is the application for credit account form I have posted. I do not have any correspondence either from the claimant dated 13th January 2010. There was no written offer and no other documents were signed other that what I have.

Sorry, not much help.

[The Mould]

Hi The Mould, I do not have any guarantee agreement, the only document that i appear to have signed is the application for credit account form I have posted. I do not have any correspondence either from the claimant dated 13th January 2010. There was no written offer and no other documents were signed other that what I have.

Sorry, not much help.

 

 

Thank you Zignafio

How did the £30k credit facility come about? I mean, 5 months after you signed an application for a credit facility the Claimant opened an account in your Company’s name and started trading with you on the basis of the contents set out in said application signed by you, save that you or rather your Company was requesting £100k credit account facility. There must have been some correspondence beforehand, some history, whereby you two parties negotiated an agreement for said £30k credit facility.

Are you still in contact with the two former partners of the Co? Were all three of you equal joint partners?

Can you please scan in a pdf copy of the reverse of the said application which contains the Claimants’ conditions of sale?

How did you obtain said application? Did the claimant or any rep of his inform you of the personal guarantee clause set out in said application?

I shall catch back up with you again out here on these moors very shortly old boy and I shall try and help you to the best of my ability, until then, stay on the path and beware the full moon.

Kind regards

The Mould

[Zignafio]

Hi and thank you again for your interest. I did try to pm you a moment ago with some information that I was a bit reluctant to post for all to see. Unfortunately, as I am a new member and have not posted enough it was not allowed.

So I guess here goes and all in. I will try and prevent it from becoming exhaustive.

8 years ago I was approached by (Company a) to set up a business. The reason for this being they were looking to expand there business and there was scope to do so. They were in a situation where they were carrying out approximately 300k turnover per year working for 2 clients, (yes 2). The scope for growth in this case being they were sub contracting over 500k per year to a small handful of companys to work alongside them. Unfortunately they never had the knowledge within this discipline to carry out these currently sub contracted works where as I did. Anyway, we set the business up and within 2 years Company a turnover had doubled whilst company b turnover was approaching the 500k mark.

In April 2009 a client of company a went into liquidation owing approx 175k forcing them into liquidation. 4 of the partners then came to work for company b. given they were already directors and shareholders.

Now, the claimant in this case was a supplier of company a at the time of liquidation. Due to my new found employees and the need to put them to work an application for credit account was set up with the claimant in the name of company b. The main condition to this account being accepted was we take on the remaining debt. left from company a when they went into liquidation. This sum from memory was between 20 and 25k. My emails on this laptop go back to February 2011 and I have a confirmation email from there MD thanking me for sticking with it and paying off the old debt. this was in June 2011.

Over the course we were left with just 3 of us. 1 of which jumped ship when we first got hit for the 55k, and strangely enough now works for the claimant. The other i still keep in regular contact with. Unfortunately, he is in a poor condition with the Big C.

I do not have a copy of the reverse of page. I only have the front page which is a photocopy and is what was posted to me in December.

I was never made aware of a personal guarantee form, only this credit application form. I know the wording within the credit application says what it says but nearly all of the credit application forms that I have ever signed have same or similar wording.

I hope you understand why I am a bit reluctant to name the claimant given the above statements.

Thanks again and talk soon hopefully

[The Mould]

Thank you Zignafio.

Here is a draft Defence against the claim, this is based on the material posted here by you.

Amend to suit all the facts.

 

 

IN THE COUNTY COURT BUSINESS CENTRE CLAIM No.xxxxxxxxxx

Between:

 

ABC GROUP LTD CLAIMANT

-And-

MR/MS (your full name)DEFENDANT

 

 

DEFENCE

 

 

1. Introduction
   

 

 

1. This is the Defence of MR/MS_______________(your name) of ____________(your full postal address) against the Claimants’ claim issued on 19 June 2014.
   

 

 

1. For the purpose of this Defence:
   

 

 

1. “company A” shall mean________________(state name of Co A)which the Defendant carried out works for as a sub-contractor and with which the Claimant had a legal business relationship;
   

 

 

1. “company B” shall mean________________(state name of Co B) which was formed by the Defendant and two others on__________________(state date) with the Defendant acting in the role of Director thereto;
   
2. “the contract” shall mean the contract formed and entered into between the Defendant and Claimant on_____________(state date) pursuant to the terms and conditions negotiated between the parties by way of exchange of e-mail correspondence between____________and_____________(state dates);
   
3. “the personal guarantee agreement” shall mean the Claimants’ application form for a credit account which the Defendant applied for on 11 August 2009.
   

 

1. Defence
   

 

 

1. It is common ground between the parties that the Claimant and the Defendant were engaged in business relations under the contract concluded on______________(state date). The business relationship existed between the parties from that date until_________________(state date) when company B went into liquidation..
   

 

 

1. As regards the Claimants’ statement of case, it is denied that the Defendant is personally liable for the sums claimed by the Claimant as alleged or at all because the monies sued for are not due or owed by the Defendant to the Claimant under any personal indemnity or personal guarantee agreement and no such agreement has ever existed between the parties. The Claimant is put to the strictest proof to prove otherwise.
   
2. It should be noted that the Claimant was engaged in business relations with company A and that the Defendant was a sub-contractor of company A until_______________________(state the date) when company A went into liquidation. Shortly thereafter, on the_______________(state date) the Defendant along with two others formed company B.
   
3. Unfortunately, on the____________________(state date) company B went into liquidation.
   
4. A contract did exist between company B and the Claimant for supply of goods to company B, which was negotiated by the Defendant with the Claimant, with the Defendant negotiating the contract on behalf of company B and acting in the capacity as Director thereof.
   
5. After an exchange of emails between the Claimant and the Defendant, which took place from_______to__________________(state dates), a contract was agreed between them, with the only additional condition to the Claimants’ general conditions of sale, was that company B do give an undertaking to accept and discharge the outstanding liabilities that company A owed to the Claimant. On the____________________(state date) company B performed that obligation and company A’s debt of £___________________(state the figure) owed to the Claimant was paid in full by company B pursuant to the contract. At the trial the Defendant will refer to these e-mails for their full terms and effect of the contract.
   
6. The Defendant is aware that the Claimant intends to rely on the application for credit account form as a means to enforce against the Defendant as a personal guarantee agreement; however, for reasons set out above, the Defendant has never given any such personal guarantee to the Claimant in respect of the monies he claims are due to him.
   

 

1. Accordingly, the Defendant denies liability for the claim and respectfully request that this Court find in favour of his Defence and dismiss the Claimants’ claim in its entirety and pronounce a decree against the same to this affect.
   

 

STATEMENT OF TRUTH

I believe that the facts stated in this Defence are true.

Signed……………………………………………………………………………….this___day of July 2014

(PRINTED NAME IN CAPS) – DEFENDANT

Kind regards

The Mould

Edited July 12, 2014 by The Mould
REMOVAL OF PERSONAL INFO

[The Mould]

Paragraph numbers and spacing became irregular when I cut and pasted the draft Defence.

 

 

Kind regards

 

 

The Mould

[steampowered]

Hi,

 

I'm not quite following why we are saying that the wording on the application form to the effect that op personally guarantees the company's obligations is not binding? Are we saying that the terms of the account were set out in emails and not in the application form? If that is the position I think it might be worth clarifying.

 

On another note, I think it is worthwhile contacting the other side separately from the court process to explain your financial position and that you could not afford to pay a judgment even if one was issued. Are you a home owner at all?

[Zignafio]

Thanks for the above The Mould, your an absolute legend. Paragraph 2 of defence is not quite right but i will try and jigger about. I have listed some further information below to clarify some points.

I was approached by Company A in Aug 2005 to set up company B. During the set up process I was working as a sub contractor for Company A. Company B was trading within a few months at which time I went to work for company B, occasionally sub contracting personally for company A. FYI Company A was providing most of the works for company B whilst client base was building.

Company A took a hit for £175k in Approx. April 2009 and was placed into Liquidation in March 2010. It was at this time my fellow directors of Company B came to work as employees for Company B.

What concerns me is the fact that my email correspondence between myself and Claimant only goes back to Feb 2011. Admittedly I do have correspondence to confirm the debt had been paid but I have no correspondence about the arrangement being set. At least not yet. All emails prior to February 2011 are on an old laptop that I do have but cannot power up. I will be taking this to Mr PC Repair Man tomorrow in the hope I can get power to it and retrieve previous correspondence but as of today this is something i dont have.

Q. 1 How essential is it that I have this information and at what stage will i need it.

 

 

thanks again for your help so far.. Any further assistance will be highly appreciated.

[Zignafio]

Steampowered. Your concerns are shared.

I had major spine surgery last year after putting off for 8 years and it did not go as planned so i am now registered disabled pending further surgery in August. Following the 55k hit we took in June 2012 i spent the next 12 months trying to turn things around and did not receive any income throughout so my own personal financial situation is dire. I have arrangements in place with all utility providers and my mortgage company has a possession order in place in case i fail to keep up the arrangement.

When I received the telephone call from the claimant at my home i informed him I did not sign any personal guarantee, nor did I have any recollection of signing an account application form given our arrangement. I have made my financial situation clear to the claimant and he is aware of my personal circumstances. The fact one of my ex business partners works for him I doubt theres' little he doesn't know about me.

 

thanks for your interest.. Any further assistance will be appreciated.

[Zignafio]

Please accept my apologies for any changes made to original acount. I am working from memory and going through boxes of paperwork and email correspondence for exact dates/accounts.

Regards

Zignafio

[The Mould]

Thanks for the above The Mould, your an absolute legend. Paragraph 2 of defence is not quite right but i will try and jigger about. I have listed some further information below to clarify some points.

I was approached by Company A in Aug 2005 to set up company B. During the set up process I was working as a sub contractor for Company A. Company B was trading within a few months at which time I went to work for company B, occasionally sub contracting personally for company A. FYI Company A was providing most of the works for company B whilst client base was building.

Company A took a hit for £175k in Approx. April 2009 and was placed into Liquidation in March 2010. It was at this time my fellow directors of Company B came to work as employees for Company B.

What concerns me is the fact that my email correspondence between myself and Claimant only goes back to Feb 2011. Admittedly I do have correspondence to confirm the debt had been paid but I have no correspondence about the arrangement being set. At least not yet. All emails prior to February 2011 are on an old laptop that I do have but cannot power up. I will be taking this to Mr PC Repair Man tomorrow in the hope I can get power to it and retrieve previous correspondence but as of today this is something i dont have.

Q. 1 How essential is it that I have this information and at what stage will i need it.

 

 

thanks again for your help so far.. Any further assistance will be highly appreciated.

You’re welcome Zignafio

Make any and all amendments to the draft as are required.

Any documents that you intend to rely on in your Defence against the claim will be required to be listed in your disclosure list. As part of the Court’s case management of the claim, the Court will serve directions on you and the Claimant for this stage of the proceedings, so you do not require said e-mails just yet, but you will need them in due course to support your Defence.

Be aware that as you are mentioning said e-mails in your Defence, the Claimant has a right to request disclosure of the same under CPR Pt 31 rr.31.14 & 31.15 and if he does make such request, you must comply within 7 days. You have this same right as regards the invoices and the application form mentioned in the Claimants’ particulars of claim issued on 19 June 2014 (this is also known as his statement of case).

Kind regards

The Mould

[Zignafio]

You’re welcome Zignafio

Make any and all amendments to the draft as are required.

Any documents that you intend to rely on in your Defence against the claim will be required to be listed in your disclosure list. As part of the Court’s case management of the claim, the Court will serve directions on you and the Claimant for this stage of the proceedings, so you do not require said e-mails just yet, but you will need them in due course to support your Defence.

Be aware that as you are mentioning said e-mails in your Defence, the Claimant has a right to request disclosure of the same under CPR Pt 31 rr.31.14 & 31.15 and if he does make such request, you must comply within 7 days. You have this same right as regards the invoices and the application form mentioned in the Claimants’ particulars of claim issued on 19 June 2014 (this is also known as his statement of case).

Kind regards

The Mould

 

Thanks for the input all, but can anybody tell me if this application for credit is actually a legally binding personal guarantee?

Thank you in advance.

Zignafio

[The Mould]

Thanks for the input all, but can anybody tell me if this application for credit is actually a legally binding personal guarantee?

Thank you in advance.

Zignafio

 

Yes it is legally binding and can be enforced, however, you have posted material here to state that a contract was formed between your company B and the Claimant by way of e-mails, with the only condition being that company B take on company A’s debt and repay the same to the Claimant.

Kind regards

The Mould

[Zignafio]

Yes it is legally binding and can be enforced, however, you have posted material here to state that a contract was formed between your company B and the Claimant by way of e-mails, with the only condition being that company B take on company A’s debt and repay the same to the Claimant.

Kind regards

The Mould

 

Thanks the mould, so, basically, if I can't get these emails off my old laptop to prove the fact, I'm up the swanny without a paddle? I'm really not confident I'm going to get them so may need another angle. Help, help, help...

[Zignafio]

Hi all,

I have just been reading some other threads very similar to mine and they seemed to be advised on going down the misrepresentation route. If i cannot get evidence via emails on old laptop to support my case can I go down this route. I may be jumping the gun a bit but my wife is booked in for a C Section tomorrow morning so am trying to get as much help on this matter today as possible. The application for Credit is clearly labelled, there is no mention of the Words PG and no witness signature.

Any help would be appreciated.

Zignafio

[steampowered]

Apologies if I am being a bit thick - are we saying that the guarantee you posted was given to Company A, but in fact the debt was incurred by Company B? And there there is no personal guarantee for the indebtedness of Company B? If yes, I would amend the Defence just slightly to make that clearer.

 

A representation is just a statement. In order to make a case for misrepresentation, you would need to show that the seller told you something about the document you were signing which wasn't true, and that you relied on that statement when signing the document. I don't think you've mentioned anything about this yet.

 

There is also a technical legal argument which can be raised. Guarantees have to be in signed writing. When guarantees of this nature are properly drafted by a lawyer there would normally be two signature blocks, one for the Director to sign on behalf of the company and another one for the Director to sign in his personal capacity. You could have a go at trying to argue that as the document was only signed by the company and not by you in a personal capacity, there was no signature within the meaning of the Statute of Frauds Act 1677. But I think this is a last resort and it is a difficult concept to deal with as a litigant in person.

[The Mould]

Apologies if I am being a bit thick - are we saying that the guarantee you posted was given to Company A, but in fact the debt was incurred by Company B? And there there is no personal guarantee for the indebtedness of Company B? If yes, I would amend the Defence just slightly to make that clearer.

 

A representation is just a statement. In order to make a case for misrepresentation, you would need to show that the seller told you something about the document you were signing which wasn't true, and that you relied on that statement when signing the document. I don't think you've mentioned anything about this yet.

 

There is also a technical legal argument which can be raised. Guarantees have to be in signed writing. When guarantees of this nature are properly drafted by a lawyer there would normally be two signature blocks, one for the Director to sign on behalf of the company and another one for the Director to sign in his personal capacity. You could have a go at trying to argue that as the document was only signed by the company and not by you in a personal capacity, there was no signature within the meaning of the Statute of Frauds Act 1677. But I think this is a last resort and it is a difficult concept to deal with as a litigant in person.

http://www.bailii.org/ew/cases/EWCA/Civ/2012/265.html

The above authority confirms that under s.4 of the Statute of Frauds, agreements of guarantee do not necessarily require a signatory thereon in order to constitute a binding enforceable guarantee.

Zignafio

The key to your Defence is most certainly contained in those e-mails. If you are not able to retrieve the e-mails then it might be the case that you should look at making a full and final settlement offer without any admission of liability to the sum claimed to the Claimant, because in the absence of those e-mails, the application form that is signed by you and him is a legally binding guarantee agreement.

Kind regards

The Mould

[steampowered]

http://www.bailii.org/ew/cases/EWCA/Civ/2012/265.html

 

The above authority confirms that under s.4 of the Statute of Frauds, agreements of guarantee do not necessarily require a signatory thereon in order to constitute a binding enforceable guarantee.

Just to clarify - some sort of signature is still required but not necessarily a physical one. The point of that case is that an electronic signature can be enough (refer to paragraphs 31-39).

[Zignafio]

Hi all,

I have just been reading some other threads very similar to mine and they seemed to be advised on going down the misrepresentation route. If i cannot get evidence via emails on old laptop to support my case can I go down this route. I may be jumping the gun a bit but my wife is booked in for a C Section tomorrow morning so am trying to get as much help on this matter today as possible. The application for Credit is clearly labelled, there is no mention of the Words PG and no witness signature.

Any help would be appreciated.

Zignafio

Hi all,

Sorry I've been away for a couple of days, the wife had the baby girl on Tuesday and its been a bit hectic but need to update on what's been happening.

Was advised to speak to the claimant and appeal to his good nature and see if there's is another way of settling this before it gets messy. We are now in a situation where we are talking although we seem to be miles apart on agreeing an exact figure any the terms thereof.

I have a couple of questions that I'm hoping someone Dan answer for me.

I can't log into the moneyclaim online at the moment but can anyone tell me, if I cannot agree terms etc. with the claimant, can I file my defence online as I did the acknowledgement? And also. What is it I need to do if I can agree a settlement?

Thanks again guys for all the help.

Zignagio.

[The Mould]

Congratulations Zignafio, I hope that your wife and new-born child are in good health and doing fine.

As regards any settlement with the Claimant, ensure that there is a clause therein which states the following:

“This agreement is made between__________ ________ and ________________(put the names of the parties) in full and final settlement of_______________(put Claimant’s name) dated 19 June 2014 and made without any admission of liability thereto with the further conditions that______________ (put Claimant’s name) agrees to discontinue with his said claim and serve notice of such on______________________(put your name) within 21 days hereof and that the parties do bear their own costs in that matter”.

If settlement terms cannot be agreed, then file your Defence against the claim in time otherwise the Claimant will be entitled to obtain default judgment against you.

Kind regards

The Mould