HSBC full and final settlement

[Paul_Walters]

I should probably post this in the Insolvency bit but it appears to have been taken over by IP's vying for business. My company is 15 years old. In the crunch, we went through very hard times but survived. I took out a 10 year loan with HSBC 5 years ago to turn things around but it hasn't really worked. Too little, too late. The company is now technically insolvent so I need to do something. Now, I have no intention of leaving anyone high and dry. I can raise funds to pay trade creditors in a month or so and a few other bits we owe. I don't think I can raise enough to cover everything.

When we took out the bank loan myself and my father offered a PG. Times have changed. He is frail and no longer has the assets to cover the remainder. I do have the assets but they are in trust so hard to get at. I can probably raise something like 75% of the loan amount within a few months. My question is, has anyone offered a FFS on a business loan and been accepted? I feel I have tried my best, paid 8% interest for 5 years and have just run out of steam. I don't want them to go after my father and the alternative is paying them off in full and leaving smaller creditors with nothing, or at least waiting until I can pay them.

In retrospect, I should have closed the door way back then but tried to keep people employed and suppliers paid. The damage was done when one of our customers went bust, owing us thousands.

Given that they have 2 PG's, will they even consider a settlement to get it all put to bed?

 

[roydmoorian]

It is HSBC, as long as there are assets for them to go for they will be most understanding and find ways of increasing their management fees in the meantime, after all (with apologies to L'Oreal) You're Good For It.

 

[Paul_Walters]

So best to pay them first then and let the rest hang on? It's not like I would ever use the bank again with their revolving door business manager programme and that stupid log in device.

 

[ethical PR]

If you are liquidating your company I don't believe you can have preferred creditors. So for example you can't pay your designer in preference to your tax bill.

On a personal level if you have a persona guarantee I'm sure your top priority is to avoid any stress or impact on your father. I haven't heard of banks offering settlements when they have a guaranteed but I am not a financial expert.

Perhaps offer 75% of the loan and a staged payment plan for the balance with a property or other collateral as guarantee, so the bank can be confident if you don't pay the balance you owe, they can realise this through the asset. I think this would be the best way of making sure they don't go after your father.

 

[Paul_Walters]

Thanks. I don't really want to liquidate it as I have pretty much all the funds I need to right the ship and then get on with something else. Just a little short. The business is still working, it's just weighed down by commitments. I want a clean slate as we are making profits, year after year but struggling with cash flow and as I say, now insolvent so I need to act. I have debts from years ago that are nothing to do with what we do now and am finally in a position to settle them.

I suppose I could settle a large part of the loan to cut interest payments, pay off my other creditors and keep a healthy bank balance and carry on trading but the temptation is to clear the decks in one go.

 

[S Goodman]

They won't consider a FFS until you've defaulted on the repayments a number of times, set up a arrangement and then defaulted on that as well. Then you can get a FFS of 55% without to much trouble. It'll total screw your credit rating though.

Basically as long as you are paying them they have no incentive to reduce the balance.

 

[Paul_Walters]

Yeah, what I thought really. Guess I need to make the others wait a little longer. Still, nearly there. Thanks for all the comments.

 

[alwaysinamess]

Who comes first with the o/r the wages or the HMRC

 

[Mark T Jones]

I'm actually pretty confused

The business is insolvent, but you have funds to pay a chunk off the loan and other creditors? Why not use those funds to stabilise the business?

It is profitable, but you are worried about PGs? As above, make it stable and there is no worry

As some have rightly said, your bank won't offer a settlement whilst you are trading. They might however offer payment pause or extended term.

Alternatively you could consider a CVA. One of those folk touting for business on the insolvency forum might be qualified to help