- Original Poster
- #1
After nearly 17 years in business, we have unfortunately made the decision to close - a bitter pill to swallow but such is reality. Aside from the declining retail sector and increasing operational costs, the further damage caused by BREXIT resulted in a huge loss of revenue from Europe, we have approached the process of closure ethically as possible ensuring most of all our creditors were paid.
Back in 2007, we had taken an unsecured loan for 10K from a high street bank. This was further enhanced with personal investment to purchase stock/inventory at the time. The loan was for a two year term. In 2008 (mid way through the loan) we were approached by a high street retail chain, and in order to fund the new business, we approached the bank for a second time to assess our options.
We were advised that if the loan was paid, we could proceed with an overdraft for 30K without any "tangible security". The only reason to prevent this being signed off was there was less then a 50% balance of the above loan which meant we could not be given the full 30K facility. In writing we were advised to pay of the loan, or provide a PG against the loan balance in order for the overdraft to be approved.
A floating debenture was issued and given there was a small balance on the loan, we signed a PG to cover the loan balance in order to approve the overdraft. Time for the deal wasn't on our side and paying off the loan at the time wasn't financially feasible. The overdraft was put into place. This was all actioned in December 2008.
Fast forward to 2024, we have retained the O/D facility throughout, however the bank are now suggesting the PG signed can be used against any borrowing issued; past, present and future, despite the fact we have written communication from a business manager who undersaw the setup that NO tangible security was needed for the sum they had approved (29K).
Since the overdraft inception, we have had multiple business managers, annual renewals, however none of which have ever referred to this security document, nor has the PG been reviewed. We have worked on the assumption no guarantee was ever in place (as we were advised to sign on to underwrite the loan not the overdraft) Once the loan was paid, the PG was assumed to be invalid.
Could this be seen as mis-selling given the advice we were given and does anybody have any advice in terms of how this could be viewed? It seems like a grey area but the PG does not state the value it covers (which seems a bit bizarre) because no asset assessment was ever conducted nor does the bank understand what assets we have to back up the PG.
The best part of 17 years is a long time and whilst we are not deterrent or avoiding our obligations, we feel this being very much construed by the bank because at the time the facility was sold. We have written communication from the bank (on more then occasion) that NO TANGIBLE SECURITY WAS NEEDED for the approved amount.
Be keen to hear from anybody who could shed any light or advise on this position.
Back in 2007, we had taken an unsecured loan for 10K from a high street bank. This was further enhanced with personal investment to purchase stock/inventory at the time. The loan was for a two year term. In 2008 (mid way through the loan) we were approached by a high street retail chain, and in order to fund the new business, we approached the bank for a second time to assess our options.
We were advised that if the loan was paid, we could proceed with an overdraft for 30K without any "tangible security". The only reason to prevent this being signed off was there was less then a 50% balance of the above loan which meant we could not be given the full 30K facility. In writing we were advised to pay of the loan, or provide a PG against the loan balance in order for the overdraft to be approved.
A floating debenture was issued and given there was a small balance on the loan, we signed a PG to cover the loan balance in order to approve the overdraft. Time for the deal wasn't on our side and paying off the loan at the time wasn't financially feasible. The overdraft was put into place. This was all actioned in December 2008.
Fast forward to 2024, we have retained the O/D facility throughout, however the bank are now suggesting the PG signed can be used against any borrowing issued; past, present and future, despite the fact we have written communication from a business manager who undersaw the setup that NO tangible security was needed for the sum they had approved (29K).
Since the overdraft inception, we have had multiple business managers, annual renewals, however none of which have ever referred to this security document, nor has the PG been reviewed. We have worked on the assumption no guarantee was ever in place (as we were advised to sign on to underwrite the loan not the overdraft) Once the loan was paid, the PG was assumed to be invalid.
Could this be seen as mis-selling given the advice we were given and does anybody have any advice in terms of how this could be viewed? It seems like a grey area but the PG does not state the value it covers (which seems a bit bizarre) because no asset assessment was ever conducted nor does the bank understand what assets we have to back up the PG.
The best part of 17 years is a long time and whilst we are not deterrent or avoiding our obligations, we feel this being very much construed by the bank because at the time the facility was sold. We have written communication from the bank (on more then occasion) that NO TANGIBLE SECURITY WAS NEEDED for the approved amount.
Be keen to hear from anybody who could shed any light or advise on this position.
