How to get out of personal guarentee for business with crook director

Discussion in 'Insolvency' started by Izzy daw, Feb 24, 2018.

  1. Izzy daw

    Izzy daw UKBF Newcomer Free Member

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    Hi my first post here but in need of big help. I joined 5 other “friends” in a business venture in scotland to open a dental practice 2 years ago. We opened a limited company and only started the process of making a specific practice mid 2016. The business account was only accessable by two directors who opened the business account and naively did not notice our attempts at getting bank statements and cards/signatorys were blocked on multiple occasions.

    On the grand opening of the practice, the director based in scotland and one other (his accomplice) called a vote to remove another director claiming he cant work with them, and if they stay then he will leave. He cooerced others to vote against that member as if the scotland director left the venture would collapse. He then did the same thing to myself the next day, called a vote, everyone didnt want to vote so stayed silent but i knew the result would be me voted out so i stated i would leave if i got paid my initial investment and all personal guarentees and liabolities removed, to which all directors agreed.

    I have now got the bank statements by going to the bank with id, to find the director who had initiated the vote for restructuring the business has withdrawn 28k in cash, alongside made another 28k in illegitamate transfers and taken a 20k refund from builders deposit into his personal account, paid in 8k less the other directors when he stated we all had to pay into the account (86k total) in addition to using the card willy nilly on personal expenses on sainsburys l, home bargains, petrol (we dont have a company car) upto anothe 1k.

    Another director upon finding this information has also resigned. The crook director is now demanding all shareholders need to pay another 2500 into the account and prob more on going even though they have been kicked out of the company otherwise they have no money to pay for the bills/loan repayments so our personal guarentees will kick in. The total for the loans are 550k. The company balance is omly 1500. Even though they agreed to pay out our financial investment in person (11k) following the meeting they have stated that i requested it and did not say they have agreed and ignored all emails since other than keep messaging stating we need to put more in


    We were all so stupid to let the two directors scam us all and get us into personal guarentees, but how do we get out of it? Is there anything i can do about the fraud they are committing as they spent all the company money withoutc consent from any of the other shareholders directors, and likely been siphening even more than i know. And worst still even if we leave the personal guarentees still stay over our head for them to bankcrupt the company

    My main aik to remove pg and wash my hands of these two crooks


    Any advice would be much appreciated
     
    Last edited: Feb 24, 2018
    Posted: Feb 24, 2018 By: Izzy daw Member since: Feb 24, 2018
    #1
  2. The Byre

    The Byre UKBF Ace Free Member

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    You have been scammed and that right royally!

    And that is one of the oldest (and obviously still viable) scams going - find a 'mark' or in your case a collection of marks, tell them that we are all starting a business and that it will be mega-profitable and get them to invest and even to sign personal guarantees for anything and everything, but don't give them any access to any of the accounts or in any way, let them interfere with the 'business'.

    Then clean the place out, right down to the very bones, but make it look as if it could just about be the result of some very 'unfortunate' business decisions (such as a new car for the MD, or an ill-advised repayment of a director's loan, together with a large dividend!)

    So now it is not fraud, but a civil case and the marks have to sue to get their money back.

    That is what happened to a friend of mine - and the scammer was his own brother! He was taken to the cleaners for £2m. Three years on and he is still collecting evidence for the police and paying for forensic accountants to provide the paper-trail for a conviction.

    Fortunately for my friend, the brother was stupid enough to buy houses, which my friend is in the process of sequestrating. A clever scammer just moves the money out of the country!

    But your next step is to find a forensic accountant who can put a case together for both a criminal prosecution (no, the police do not do this for you!) and for a civil case. A suitable lawyer should be your very next call!

    Oh, and good luck!
     
    Posted: Feb 24, 2018 By: The Byre Member since: Aug 13, 2013
    #2
  3. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    Sorry, I got a bit lost with the story, but my reading is that you are a shareholder but no longer a director?

    If not, you should resign immediately and ensure that your resignation is noted on all public records

    Write to all creditors to whom you have offered a guarantee noting that as you are no longer a director you wish to rescind your guarantees.

    They won’t agree to do it (they may agree to a 6 month release). But it will curtail the borrowing and gradually reduce your exposure. There is some risk here that the lenders will review the lending and pull the plug. Include any written evidence of the agreement to remove your guarantee

    Overdrafts and some loans are reviewed annually - the lenders will be obliged to take into account your withdrawal
     
    Last edited: Feb 24, 2018
    Posted: Feb 24, 2018 By: Mark T Jones Member since: Nov 4, 2015
    #3
  4. MY OFFICE IN CHINA

    MY OFFICE IN CHINA UKBF Big Shot Full Member

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    You need (good) legal advice.
     
    Posted: Feb 24, 2018 By: MY OFFICE IN CHINA Member since: Nov 16, 2011
    #4
  5. Simon Green

    Simon Green UKBF Contributor Free Member

    98 8
    The Fundamental Key to understanding your predicament comes back in the very first line of the first paragraph of your introduction, namely ‘’friends.’’ You should never, and for that matter no one else should ever either, mix pleasure with business.
    Where did you meet/come across these individuals?
    Whatever the roots to your story and the sad, sad tale that you choose to share here on this forum, you need to act very very quickly.
    In my experience Personal guarantees are indeed a full and lasting nightmare to break away from; the roots of your individual problem rum deep and you alone need to grab the problem at the root and force this all up from the ground.
    Have you considered a Wipping Order? Best practice solicitors would advise I think; expensive for you but a Wipping Order would force the root problem up into full open air.
    Best of Luck
     
    Posted: Feb 24, 2018 By: Simon Green Member since: Dec 4, 2017
    #5
  6. The Byre

    The Byre UKBF Ace Free Member

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    I fear our brave OP was scammed by a couple of professionals.

    The MO is absolutely classical - a group of medical professionals (good target, as they earn enough and have cash to spare AND they fancy themselves as businessmen!) are targeted by one person. He makes friends with them and even suggests that they go into business together. What the targets don't know, is that their new 'friend' has an accomplice that has already set up a whole 'business opportunity'.

    The new 'friend' now tells his targets that he has found this bloke and believes that there is real money to be made. "Each of us has to invest £100,000 and sign some paperwork!"

    He pretends to put up his £100k and the new guy has also put in £100k - totally fictitious of course. The rest is the story as outlined by our OP at the top.

    Of course the personal guarantees make the whole thing even more profitable for our two buddies and I personally do admire the elegance with which they seem to have worked this one!
     
    Posted: Feb 24, 2018 By: The Byre Member since: Aug 13, 2013
    #6
  7. Izzy daw

    Izzy daw UKBF Newcomer Free Member

    5 0
    This scammer was a fellow medical professional, he owns his own practice in Scotland and advised us that there are big opportunities in Scotland as rules different. We just needed to put 10k each. Then he said down the line on a few occasions “guys the costs are way more than we thought we are going to have to take out loans” initial loan for 40k with PG. I’ve never taken a loan in my life and hate them with a passion but thought don’t have a choice as will lose my initial investment. Then more and more loans came in without our knowledge just got an email saying this is urgent we need this signed today or builders will stop work and we are late on bills etc etc”
    Before u know it we went from 60k loan to 550k.

    It seems like he must have done this before by the way he played us all but don’t know how he’s getting away with it being a registered Dentist as he should have got struck off.

    I’m not sure at what point he roped in his accomplices another Dentist who at the time of joining appeared independent and not to know him.

    If I can get out of the PG, I’ll walk away with the loss of 10k forgetting I put in and all the work I put in as don’t want to lose my house to these scammers.

    I have contacted solicitors but seems this is a “civil” case so I can’t get them out in jail and all proceedings will be costly solicitor wise. The scammers have no interest to settle this case quickly to reduce legal costs as they will burn through whatever company money they have for their legal fees.
    RFrom the shareholders agreement it is the buyer of the shares (them) that has to endevour to remove our personal guarantees and indemnify until that’s done. They have no interest in that, so will either just leave things as they are so we are shareholders but not directors till they bankcrupt it or do a shoddy attempt to remove the PG, so the banks don’t remove anything keeping us in the firing line and get the shares (which are worthless at this stage anyway).

    I have not looked into a ‘wiping order’ can’t seem to find anything about it online but If it’s DRO, the amount is over the threashold as 550k loan.

    The last I spoke to my solicitor they said they need to go through all the document and will get back to me on Monday.
    Thanks for all the replies, will ask the solicitor about the forensic accountant on Monday
     
    Posted: Feb 24, 2018 By: Izzy daw Member since: Feb 24, 2018
    #7
  8. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    With some experience of this (from ghe outside). I’d say the perpetrators are 20% outright fraudsters and 80% greedy egomaniacs.

    In the first case, TBH you are buggered unless you want to invest big money in lawyers

    In the latter case you can gently release yourself by following my previous advice.

    Obviously you won’t be objecting more money, will you?
     
    Posted: Feb 24, 2018 By: Mark T Jones Member since: Nov 4, 2015
    #8
  9. KAC

    KAC UKBF Enthusiast Free Member

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    Have you thought of reporting him/them to the General Dental Council?
    His/their action could be "bringing the profession into disrepute" and could be "considered deplorable" by their fellow professionals
    Download "Standards for the Dental Team" here and look at Standard 1.3 on page 12.
    Disrepute is not restricted to just dentistry.
    This an example of a decision not directly related to dentistry
     
    Posted: Feb 24, 2018 By: KAC Member since: May 7, 2017
    #9
  10. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    This may or may not be good advice. And is certainly an axe to wield

    However remember to OPs best interest s lie in the business succseeding.
     
    Posted: Feb 24, 2018 By: Mark T Jones Member since: Nov 4, 2015
    #10
  11. Simon Green

    Simon Green UKBF Contributor Free Member

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    Never ever throw good money after bad;
    But it’s worth looking at a Wipping Order.
     
    Posted: Feb 24, 2018 By: Simon Green Member since: Dec 4, 2017
    #11
  12. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    Can you clarify this wipping order as google gives no results.
     
    Posted: Feb 24, 2018 By: Mark T Jones Member since: Nov 4, 2015
    #12
  13. KAC

    KAC UKBF Enthusiast Free Member

    848 188
    Sorry. Didn't read full thread as too long but certainly sounds like something the GDC would have a look at
     
    Posted: Feb 24, 2018 By: KAC Member since: May 7, 2017
    #13
  14. Izzy daw

    Izzy daw UKBF Newcomer Free Member

    5 0
    After looking him up on company house, he has multiple dissolved or resigned from companies with “floating charges” I assume that’s liquidation of some sort.
    The crook emailed Just now to all the directors stating that he is resigning and wants all liabilities/PG removed and he will transfer all his shares after this !

    I will certainly contact the GDC. I am considering if it would be a good idea to contact all the directors from the other insolvent companies he’s been party to find out more information on if he did the same thing to them and build a stronger case if fraud?

    In terms of personal liabilities it appears I was always two steps behind him and he’s won and I’ll have to pay out the whole loan split between the directors.

    I think not all the loan has come (100k instalment to come) so thinking I should block the company account for fraud so atleast he can’t steal that. I’m not sure if I need legal advice prior to doing that?
     
    Posted: Feb 24, 2018 By: Izzy daw Member since: Feb 24, 2018
    #14
  15. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    I’m sorry to be the bearer of bad news, but technically you are almost certainly on the hook for the whole loan amount under ‘joint and several’ liability

    In light of the above post, you really must seek legal advic3
     
    Posted: Feb 24, 2018 By: Mark T Jones Member since: Nov 4, 2015
    #15
  16. ethical PR

    ethical PR UKBF Legend Free Member

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    Also report him to the CQC.
     
    Posted: Feb 24, 2018 By: ethical PR Member since: Apr 19, 2009
    #16
  17. Mr D

    Mr D UKBF Legend Free Member

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    You can try and build a stronger case of fraud, but its you doing the work and don't know your chances.
    Talk to a solicitor.

    Sounds like he's ahead of you in trying to get PG removed. Cannot see a lender removing all of you and the ones who do have PG can each be chased for the debt if company doesn't pay it.
     
    Posted: Feb 25, 2018 By: Mr D Member since: Feb 12, 2017
    #17
  18. The Byre

    The Byre UKBF Ace Free Member

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    Posted: Feb 25, 2018 By: The Byre Member since: Aug 13, 2013
    #18
  19. Simon Green

    Simon Green UKBF Contributor Free Member

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    A Wipping Order is the term used by my solicitor regarding an attempt to cluster the debts with the intention of the debt being shared.
    Having slept on your predicament my advise is always as already stated:
    Don’t through good money after bad!!!
    Have you considered personal bankruptcy which will completely wipe your slate clean?
    You may loose your existing home etc but surely throwing good after bad money is very very unwise.
    Best luck to you mate,
    But please,
    Live and Learn!!!
     
    Posted: Feb 25, 2018 By: Simon Green Member since: Dec 4, 2017
    #19
  20. AllUpHere

    AllUpHere UKBF Ace Free Member

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    That was my first thought when reading this. Don't presume the liability will be spread between you all. You can become liable for the entire debt.
     
    Posted: Feb 25, 2018 By: AllUpHere Member since: Jun 30, 2014
    #20