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RBS/Shoos Bankruptcy Petition - old RBS Business loan via a deed.

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Hello,

So a bit of background.

In 2008 I took a business loan out with RBS, I was only 22 out the time.

The loan was for £25k and I kept up with payments for 12 months.

 

Unfortunately, the business didn't work and it was dissolved in 2010.

I didn't realize at the time that I had signed a deed as opposed to a personal guarantee.

The last payment was made against the loan in 2010, and no further correspondence was received until 2018.

I understand a deed has a statute of limitation of 12 years as opposed to 6 years.

Mid way through last year, I received a statutory demand for £23,496 from Shoosmiths regarding the debt,

I did not have this set aside, and a bankruptcy petition was made.

 

I agreed to pay Shoosmiths £1000 a month for 6 months as a full and final settlement, unfortunately I was unable keep up with these payments, and another Bankruptcy petition has now been made.

 

I have offered to pay £300 a month over 24 months as a full and final settlement,

however this has been declined due to failure to keep up with a previous payment arrangement.

They are demanding £16k upfront which I cannot afford right now.

 

The date for the hearing is the 31st of May, so the opposition needs to be entered over the next couple of days.


I have recently started a business, this is my only source of income, so to be made bankrupt would completely ruin my business and my income for the foreseeable future.

I do have a family friend solicitor who is helping me out free of charge, however I am unsure what the chances of the argument standing up in court are.

His arguments are:

1. The debt is older than 6 years, and no judgement was entered, payments made or disputed within 6 years of the final payment date made to RBS.

I understand a deed has a 12 year limitation, however he is stating that as the actual debt is statute barred, there is no debt for the deed to guarantee.

2. RBS do not have the original credit agreement, and they cannot prove the amount of the debt.

3. The bankruptcy petition has stated that the guarantee deed was dated 21st May 2012, however the guarantee deed was actually dated 2009.

What are the chances of these arguments holding up in court?

I am extremely concerned about going bankrupt.

 

I understand I should have kept up with the original payment plan, and only have my self to blame.

However I am unsure if the amount they are quoting is even correct as I have not seen a credit agreement as they have lost it.

Any help would be appreciated.

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Hi and Welcome to CAG

 

Was your company a limited company that was dissolved in 2010 ?

 

Why do you assume its a deed rather than a normal business loan when they cant even disclose a copy of said agreement ?

 

For a deed to be valid there are certain criteria that must be met

1. In writing
2. Must be clear on the face of that it is a deed - usually in the title of "Deed of Guarantee" is sufficient to show this
3. must be executed properly - this means signed by both parties and signed by a witness. This is sometimes where deeds may fail as a party to a deed cannot be a witness.
4. Must be delivered - For a deed to be delivered, it is when the party give an indication or intention to be bound even if the deed is retained in their possession.

Limitation period on deeds are 12 years but if the deed is defective in some way, then it will only be a simple contract which the limitation period is 6 years.

 

Andy


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Thanks Andy,

 

Yes, it was a limited company with me a the sole director. 

 

They still have the deed and have sent me a copy, they do not have the original loan agreement, but as they have the deed, I assume this will not matter.

 

The deed was signed by my self, and by the account manager at RBS. I have uploaded the deed if you wouldn’t mind having a look?

IMG_2269.jpg

IMG_2274.jpg

IMG_2271.jpg

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that deed is not witnessed by a third party - invalid.

yes they need the signed agreement.

 

so 6yrs have elapsed...nice try RBS..

 

 


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Thanks for the reply.

 

Would the bank manager not be classed as the witness on this document as it says “in the presence of”. 

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So its a Personal Guarantee by you as Director of a lImited Company.

Was it given without supporting security being provided by the guarantor or with supporting security such as a legal charge over the guarantor's family home. ?


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There was no security given, no charge over any property.

 

I don't actually own a property, I rent, I have no assets, I don't quite understand why they gone down the bankruptcy route in the first place.

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The hearing was postponed until the 8th of August due to health issues. I’m not sure if I have a plausible defence, I’m doubting my solicitor, the points he is making do not seem to be valid.

 

Should I appoint a barrister to try and defend it or is there no point? Does the deed look like it has been carried out correctly? 

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surely that deed is invalid. it is not witnessed by a third party?


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I mentioned this to my solicitor, but apparently it is a grey area if a bank manager can act as an independent witness or not, and apparently this argument won’t usually be successful unfortunately.

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There is no statutory provision requiring a witness in these circumstances to be independent. However the purpose of having a witness is so that they can provide unbiased evidence of what was signed and by whom, if required in the future. Therefore a witness should be independent and it is best practice to interpret this widely.

A witness should not be the signatory’s spouse or partner or a family member, and should not have a personal interest in the provisions of the document. Case law has confirmed that a party to the document cannot act as a witness to another party’s signature. It is advisable that a witness is aged eighteen or over.

 

More importantly ...One of the distinguishing factors about the execution of a deed as compared to a contract is that a deed must be “delivered”. Delivery fixes the date from which the executing party is bound by the deed, and once delivered, a deed is irrevocable in the absence of an express right of revocation. At common law, a deed is delivered when a party expresses an intention to be bound by the deed, even if it retains possession of the document.

 

The best way to deal with delivery of a deed is to have clear wording in the document setting out that the deed will be delivered on the date appearing at the head of the document. Where a deed is executed by a company, legislation provides that it is presumed to be delivered on execution, unless a contrary intention is proved. There is no such presumption for execution by an individual. Clear wording in the document confirming the position on delivery will avoid confusion and unintended consequences.

 

https://www.osborneclarke.com/insights/signed-sealed-delivered-execution-of-deeds-and-documents-and-how-it-might-go-wrong/


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Thank you for the above Andy.

I’ve not stated to Shoosmiths that I have not signed the agreement, however at the time I didn’t really understand the agreement, it was just put in from of me, and told to sign. I did also sign a document saying it did not require legal representation.

 

What would you suggest as my next steps? 

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I dont think its in question with regards to your signature...its whether the document has been legally executed and if its contents are legally accepted as a valid deed.

questionable as to whether its a deed or a simple contract...if the latter then statute of limitations is 6 years not 12.

 

Also there is no dates in the header with reference to be " delivered " or any mention of being " delivered " throughout the agreement ?  

 

And from what I can make out there is no third signature ? (the two you have blacked out are your name and signature ?)


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Thanks for the response Andy.

 

That is correct, there is no third signature, the blanked out sections are my own name and signature. The deed was only signed by my self and the bank manager that dealt with me, so only 2 signatures. 

 

Would you assume the deed is invalid?

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There's plenty information in the links I have provided which would suggest so...a deed must be witnessed ..not necessarily independent..but without three signatures its validity must be questioned.

 

See what your Solicitor thinks.


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