Do I have to pay overdraft guarantee?

[Stuart78]

I was a shareholder of a company, I couldn’t be a director due personal matters.

Whilst a shareholder, I took an overdraft for the business. I didn’t know this was personally guaranteed but now been told it was.

I sold my shares but was still involved and then I increased the overdraft.

The bank has called in the personal guarantee. Do I have to pay it or because I was not legally involved in the business can I get out of it? Should the bank not have checked that I was a shareholder or director?

 

[DWS]

I was a shareholder of a company, I couldn’t be a director due personal matters.

Whilst a shareholder, I took an overdraft for the business. I didn’t know this was personally guaranteed but now been told it was.

I sold my shares but was still involved and then I increased the overdraft.

The bank has called in the personal guarantee. Do I have to pay it or because I was not legally involved in the business can I get out of it? Should the bank not have checked that I was a shareholder or director?

Why is the Company not repaying the loan?
I would not think it matters if you were involved with the Company or not, if you have given a PG and the the Company has ceased the repayments of the loan then I imagine the bank is perfectly entitled to ask you to pay, cannot see how you can argue the case if you signed the PG.

 

[fisicx]

Maybe the bank should have done due diligence but they didn’t. As the guarantor of the loan you are personally responsible for the repayments should the company default. The bank wants its money back. You need to give them the money.

 

[Mark T Jones]

Ask to see the document you signed.

Read the content. In particular, look to see if it mentions specific sums - there is possibly a ceiling to your liability.

TBH, I'm struggling to see how you wouldn't know you signed a PG - banks tend to make a pretty big deal of it.

 

[Stuart78]

Why is the Company not repaying the loan?
I would not think it matters if you were involved with the Company or not, if you have given a PG and the the Company has ceased the repayments of the loan then I imagine the bank is perfectly entitled to ask you to pay, cannot see how you can argue the case if you signed the PG.

Company was liquidated by the directors.
I’ve told one of the directors that if they pay it I won’t report it as fraud. I’m worried I maybe shouldn’t have said this as have been told it could be extortion?

 

[Newchodge]

When you say 'I took on an overdraft' and 'I increased the overdraft', if you weren't a director you had no right to do that on behalf of the company. That may be an issue that matters. And, yes, using extortion is never a good idea. What fraud would you nor report them for?

 

[fisicx]

Company was liquidated by the directors.
I’ve told one of the directors that if they pay it I won’t report it as fraud. I’m worried I maybe shouldn’t have said this as have been told it could be extortion?

It’s not fraud. The directors may not have been honest but as the company is now liquidated it’s all too late. The bank doesn’t care, it just wants the money back.

Do you have a copy of the loan agreement?

 

[Stuart78]

When you say 'I took on an overdraft' and 'I increased the overdraft', if you weren't a director you had no right to do that on behalf of the company. That may be an issue that matters. And, yes, using extortion is never a good idea. What fraud would you nor report them for?

Well I don’t remember signing this extension overdraft. Bank has sent me the copy of the guarantee which says it was sent to me but I can’t remember it and would say I never received it.

 

[Stuart78]

It’s not fraud. The directors may not have been honest but as the company is now liquidated it’s all too late. The bank doesn’t care, it just wants the money back.

Do you have a copy of the loan agreement?

Yea but not the original copy, one I’ve been sent from the bank recently when I said I didn’t know about it.

 

[fisicx]

Yea but not the original copy, one I’ve been sent from the bank recently when I said I didn’t know about it.

Read it very carefully. Look at all the clauses that mention repayments.

How much is the loan?

 

[Newchodge]

Well I don’t remember signing this extension overdraft. Bank has sent me the copy of the guarantee which says it was sent to me but I can’t remember it and would say I never received it.

But WHY and, indeed how, did you get an overdraft for a company of which you were not a director, and an increased overdraft when you wre not even a shareholder? Did you state that you had authorisation to make the application.

With regard to the PG, it is not just a piece of paper. It has to be signed by you. Have they sent you a piece of paper that you signed?

 

[Mark T Jones]

Well I don’t remember signing this extension overdraft. Bank has sent me the copy of the guarantee which says it was sent to me but I can’t remember it and would say I never received it.

You don't need to sign an extension - the original guarantee was probably a continuing, all- monies guarantee.

Detail matters.

You either signed a PG or you didn't- it will also have been witnessed. Not remembering isn't a defence.

 

[Stuart78]

When you say 'I took on an overdraft' and 'I increased the overdraft', if you weren't a director you had no right to do that on behalf of the company. That may be an issue that matters. And, yes, using extortion is never a good idea. What fraud would you nor report them for?

But WHY and, indeed how, did you get an overdraft for a company of which you were not a director, and an increased overdraft when you wre not even a shareholder? Did you state that you had authorisation to make the application.

With regard to the PG, it is not just a piece of paper. It has to be signed by you. Have they sent you a piece of paper that you signed?

I still worked with the company had access to banks etc - selling my shares was for a paper trail because I needed someone else to think I had nothing to do with the company.
By the time the company actually closed it had been a couple of years since I’d had any interaction and so it wasn’t me that spent the overdraft so I think that the directors should have to pay it.
I was told it was being liquidated and about the guarantee but I didn’t do anything because I thought it wouldn’t be my problem.

 

[Stuart78]

You don't need to sign an extension - the original guarantee was probably a continuing, all- monies guarantee.

Detail matters.

You either signed a PG or you didn't- it will also have been witnessed. Not remembering isn't a defence.

I signed it online, so it wasn’t witnessed.

 

[Stuart78]

I signed it online, so it wasn’t witnessed.

You don't need to sign an extension - the original guarantee was probably a continuing, all- monies guarantee.

Detail matters.

You either signed a PG or you didn't- it will also have been witnessed. Not remembering isn't a defence.

I don’t actually remember signing it - but all banking was done online and the copy I received says I signed it online.

 

[Stuart78]

Read it very carefully. Look at all the clauses that mention repayments.

How much is the loan?

It just says that repayment is due when the bank requests. Is for £40k
The company was liquidated last year and that set about the debt being called in.

 

[fisicx]

A PG doesn’t die when the company closes. A PG doesn't die when you leave a company or sell your shares.

A PG is an agreement to repay the loan if the company fails to do so. The fact that the company no longer exists is irrelevant. You are personally responsible. You need to arrange a meeting with the bank to discuss repayment options.

You can argue the case that you weren’t a director but the bank probably won’t care.

 

[DWS]

You worked for the Company at the time and had access to the bank accounts, the Company applied for an overdraft and the bank asked for a Guarantor for the loan which it seems you gave personally, unless you can prove that you didn’t sign the PG then I can’t see that you have a case.
Whether you can try and get the Directors to repay you would probably mean legal action but IANAL so you may need to speak to one.
It doesn’t help that the Company is now dissolved.

 

[Mark T Jones]

I still worked with the company had access to banks etc - selling my shares was for a paper trail because I needed someone else to think I had nothing to do with the company.
By the time the company actually closed it had been a couple of years since I’d had any interaction and so it wasn’t me that spent the overdraft so I think that the directors should have to pay it.
I was told it was being liquidated and about the guarantee but I didn’t do anything because I thought it wouldn’t be my problem.

As long as it was signed properly and legitimately the bank doesn't have a duty to keep abreast of changes. If they need to know its down to you to inform them.

From what I'm reading it seems that you were acting as shadow director and freely and willingly entered into ghe contract.

If either of those is verifiable untrue it would help to know the circumstances

After that, it seems you gave Been remiss in negotiating your exit and keeping people informed. Again, if that's wrong some detail would help

 

[Stuart78]

A PG doesn’t die when the company closes. A PG doesn't die when you leave a company or sell your shares.

A PG is an agreement to repay the loan if the company fails to do so. The fact that the company no longer exists is irrelevant. You are personally responsible. You need to arrange a meeting with the bank to discuss repayment options.

You can argue the case that you weren’t a director but the bank probably won’t care.

The bank have said it’s too late for me to argue it because they’ve been chasing me for a couple of years and I didn’t respond. So the only option is a solicitor. I’ve been quoted a couple of grand to initiate contact with the bank and argue that I didn’t sign it.
I’ve told one of the directors that if they pay it I won’t take legal action against them. I’m worried that saying this might mean if I do take legal action that they can use this to say I was being coercive.
The directors told me about the personal guarantee about 6 years ago, I’ve read that a case could now be time barred if they have saved the proof that they told me?

 

[Stuart78]

As long as it was signed properly and legitimately the bank doesn't have a duty to keep abreast of changes. If they need to know its down to you to inform them.

From what I'm reading it seems that you were acting as shadow director and freely and willingly entered into ghe contract.

If either of those is verifiable untrue it would help to know the circumstances

After that, it seems you gave Been remiss in negotiating your exit and keeping people informed. Again, if that's wrong some detail would help

I had previously been a director and shareholder but on paper stopped being both these things. Nothing was ever changed with the bank because my role within the company didn’t change.
When it was eventually changed and I didn’t have access it was because the directors told the bank.
I never told the bank anything. I haven’t spoken to the bank at all it’s just I received a letter from their recoveries and then I called them and they said it’s too late to negotiate because it’s been referred to recoveries and I’ll need to instruct a solictor if I want to dispute it now.
One of the directors was chatting to the bank about it and kept me updated but they couldn’t do anything because not in their name. I was angry that they had put it all on me so I refused to deal with it.
I think they should have paid it when they closed the company .

 

[fisicx]

Right now you owe the bank £40k. If you do not repay the bank will take legal action. Which means you could lose your house. It’s that serious. Pay a solicitor and hope they can find a loophole. Which is unlikely but you might be lucky.

 

[Mark T Jones]

For the benefit of others who might be in - or moving towards - a similar situation, if you are moving on and want to be relieved of your guarantee liabilities, it is essential that you write to the lender(s) in question to advise them of the change.

They won't immediately release you, on the other hand they won't increase exposure.

In the case of overdraft its likely that they will review the facility and either reduce / recall it, or seek security from the other parties.

As exiting director or shareholder, this should form part of your settlement

 

[Stuart78]

What would be the consequences of reporting it as fraud? If it’s later found that it wasn’t?

 

[Newchodge]

What would be the consequences of reporting it as fraud? If it’s later found that it wasn’t?

Reporting what as fraud?

 

[Mark T Jones]

What would be the consequences of reporting it as fraud? If it’s later found that it wasn’t?

Nothing you have written here suggests fraud has occurred (other than potentially you defrauding a third party into believing you weren't associated with the business).

If you went to the police with this story thier firm response would be 'it's a civil matter'. To get them engaged you would gave to present a high level of clear, forensic evidence.

If you were to pursue it as a civil matter you would still need to present a clear and compelling case.

 

[Stuart78]

Reporting what as fraud?

The overdraft being personally guaranteed in my name. I don’t know if I signed it or not and believe maybe someone else did it under my name. It was done a long time ago so I’m not sure if there is a time limit to do this?
I’ve already told one of the directors that they need to call the bank and sort it out and that if they don't I will have to appoint a solicitor to look into a fraud investigation. I have told them that I already spoke to a solicitor and that they believe I have a case as I thought this would convince them to sort it out if they did take it in my name.

 

[Newchodge]

The overdraft being personally guaranteed in my name. I don’t know if I signed it or not and believe maybe someone else did it under my name. It was done a long time ago so I’m not sure if there is a time limit to do this?
I’ve already told one of the directors that they need to call the bank and sort it out and that if they don't I will have to appoint a solicitor to look into a fraud investigation. I have told them that I already spoke to a solicitor and that they believe I have a case as I thought this would convince them to sort it out if they did take it in my name.

You have already said that YOU arranged the overdraft and that you did it all on line, including signing anything. How can you now possible claim, with any shred of credibility, that someone else did it?

When you told them that you had spoken to a solicitor and they believe yoiu have a case, I assume you were lying?

 

[Stuart78]

You have already said that YOU arranged the overdraft and that you did it all on line, including signing anything. How can you now possible claim, with any shred of credibility, that someone else did it?

The bank have shown me a letter that they said was sent to my house which contains the information of the guarantee. It says it was signed online. But I don’t recall ever receiving this letter or signing the guarantee.
It was about 7/8 years ago so i can’t remember.

 

[Mark T Jones]

The overdraft being personally guaranteed in my name. I don’t know if I signed it or not and believe maybe someone else did it under my name. It was done a long time ago so I’m not sure if there is a time limit to do this?
I’ve already told one of the directors that they need to call the bank and sort it out and that if they don't I will have to appoint a solicitor to look into a fraud investigation. I have told them that I already spoke to a solicitor and that they believe I have a case as I thought this would convince them to sort it out if they did take it in my name.

If you can prove 'beyond reasonable doubt' that someone else signed the PG, then you have a case to pursue.

Focus on that and stop distracting yourself with red herrings.

Just one word you need here. PROOF!

 

[Newchodge]

The bank have shown me a letter that they said was sent to my house which contains the information of the guarantee. It says it was signed online. But I don’t recall ever receiving this letter or signing the guarantee.
It was about 7/8 years ago so i can’t remember.

I have amended my previous post.

 

[Stuart78]

You have already said that YOU arranged the overdraft and that you did it all on line, including signing anything. How can you now possible claim, with any shred of credibility, that someone else did it?

When you told them that you had spoken to a solicitor and they believe yoiu have a case, I assume you were lying?

I did briefly speak to a solicitor but only to discuss fees, I haven’t instructed them yet and they haven’t commented on the case yet.

 

[Stuart78]

If you can prove 'beyond reasonable doubt' that someone else signed the PG, then you have a case to pursue.

Focus on that and stop distracting yourself with red herrings.

Just one word you need here. PROOF!

Ok, thanks. I don’t really have any proof except that I wasn’t on paper a part of the business.

 

[Newchodge]

Ok, thanks. I don’t really have any proof except that I wasn’t on paper a part of the business.

You need a solicitor to lok at the information held by the bank and establish whether, when you arranged the overdraft. an 'online suignatire was legally binding and whether what they have meets the relevant criteria. Not to help you with imaginary allegations against your ex-colleagues.

 

[Stuart78]

You need a solicitor to lok at the information held by the bank and establish whether, when you arranged the overdraft. an 'online suignatire was legally binding and whether what they have meets the relevant criteria. Not to help you with imaginary allegations against your ex-colleagues.

Thanks. I will go with that stance then. Have I caused an issue by lying about what solicitor said?

 

[fisicx]

Ok, thanks. I don’t really have any proof except that I wasn’t on paper a part of the business.

But you said you were a director.

All of this is incidental. Your name is on the PG. you owe the bank £40k. Stop trying to pretend it’s not your problem.

 

[Stuart78]

But you said you were a director.

All of this is incidental. Your name is on the PG. you owe the bank £40k. Stop trying to pretend it’s not your problem.

I wasnt at the time the overdraft was taken

 

[Newchodge]

Thanks. I will go with that stance then. Have I caused an issue by lying about what solicitor said?

For me there are a couple of things in your posts that suggest you are prepared to use dishonesty to get out of any mess you are in. I don't like that.

 

[Stuart78]

For me there are a couple of things in your posts that suggest you are prepared to use dishonesty to get out of any mess you are in. I don't like that.

I’m not trying to be dishonest. I just can’t remember.
I think I did mess up by being dishonest in the message saying that the solicitor said it was fraud though.

 

[fisicx]

I wasnt at the time the overdraft was taken

Makes zero difference. You signed the document. You are responsible for the debt.