Personal Guarantee liquidated company issues

[KrisP]

Hi all

Apologies for the question here .. just after some advice if possible

We have recently had to liquidate a company, with debts to me of £250k … Prior to the company being liquidated, I informed all creditors and entered into negotiations over payment plans for the PG’s

Long story short, one is being real hardwork .. wanting to charge 3% above base interest, secure against a home and have £1,500 a month for a period with lump
Sums by X date ..

I have offered the creditor three different figures for most recent being 62% (a percentage they have accepted off someone else) of debt, at over £85k .. they have rejected saying they want full amount or will petition for bankruptcy..

Can they do this , what will court say ?

They have also had a debt and mental health form due to mental issues for 3 years, prior to this with treatment and a recent suicide attempt

Any help is greatly appreciated

Warm regards

 

[Elliot Green]

Hi all

Apologies for the question here .. just after some advice if possible

We have recently had to liquidate a company, with debts to me of £250k … Prior to the company being liquidated, I informed all creditors and entered into negotiations over payment plans for the PG’s

Long story short, one is being real hardwork .. wanting to charge 3% above base interest, secure against a home and have £1,500 a month for a period with lump
Sums by X date ..

I have offered the creditor three different figures for most recent being 62% (a percentage they have accepted off someone else) of debt, at over £85k .. they have rejected saying they want full amount or will petition for bankruptcy..

Can they do this , what will court say ?

They have also had a debt and mental health form due to mental issues for 3 years, prior to this with treatment and a recent suicide attempt

Any help is greatly appreciated

Warm regards

I am sorry to learn of your situation.
What is the argument you consider has legs that they cannot petition if indeed they have a contractual right to enforce the debt?

 

[KrisP]

Hi Elliot

Thanks for the reply here .. in what sense do you mean the argument that they cannot petition ?

Thanks in advance
Kris

 

[Elliot Green]

Hi Elliot

Thanks for the reply here .. in what sense do you mean the argument that they cannot petition ?

Thanks in advance
Kris

My point is why do you think they would not be able to petition if the debt is outstanding and exceeds the bankruptcy limit?

The fact the creditor accepted an offer of 62% from someone else does not appear to be influential.

 

[KrisP]

My point is why do you think they would not be able to petition if the debt is outstanding and exceeds the bankruptcy limit?

The fact the creditor accepted an offer of 62% from someone else does not appear to be influential.

This is why I was asking for advice Mr Green .. I have been paying them nearly £2k per month and have offered them a large payment as they would get a lot less if they petitioned for bankruptcy due to other deals made with other creditors .. their solicitor also suggested a deal would be preferable and the business circumstances were identical In the instance of the 62% deal ..

I was merely seeking another opinion on the matter, I appreciate your input ..

 

[Porky]

It’s a tough one, you can’t give them something you don’t have. In my experience here, the issue is often that the holder of the PG assumes you have this mystical pot of cash somewhere you are hiding when in reality you don’t have it hence why your business went into admin.
The only way you can resolve this is via negotiation, IMO a court is unlikely to make you homeless. You need to really explain that if they pursue you for bankruptcy, you have next to nothing and lots of others you owe would be included and if they only got £1 a week for the next 100 years what would be the point, they need to be convinced that your repayment suggestion is better than liquidating your personal assets via bankruptcy - I see this loads of times, some go for bankruptcy out of spite, teach you a lesson, others because they think you have something you don’t. In practice taking the nuclear option and issuing a bankruptcy petition rarely results in a good outcome for the PG holder.

You need to engage, I would try and call them to discuss and endorse you have other debts, what you offer is the most you can afford, suggest if in a couple of years time your outlook improves you could review it but for now this is where you are, highlight that if they push bankruptcy it’s likely they will get nothing due to other personal debts being included.

The logical thing here is to agree terms with you but sometimes that goes out of the window, normally where they think you have something you don’t - good luck

 

[KrisP]

It’s a tough one, you can’t give them something you don’t have. In my experience here, the issue is often that the holder of the PG assumes you have this mystical pot of cash somewhere you are hiding when in reality you don’t have it hence why your business went into admin.
The only way you can resolve this is via negotiation, IMO a court is unlikely to make you homeless. You need to really explain that if they pursue you for bankruptcy, you have next to nothing and lots of others you owe would be included and if they only got £1 a week for the next 100 years what would be the point, they need to be convinced that your repayment suggestion is better than liquidating your personal assets via bankruptcy - I see this loads of times, some go for bankruptcy out of spite, teach you a lesson, others because they think you have something you don’t. In practice taking the nuclear option and issuing a bankruptcy petition rarely results in a good outcome for the PG holder.

You need to engage, I would try and call them to discuss and endorse you have other debts, what you offer is the most you can afford, suggest if in a couple of years time your outlook improves you could review it but for now this is where you are, highlight that if they push bankruptcy it’s likely they will get nothing due to other personal debts being included.

The logical thing here is to agree terms with you but sometimes that goes out of the window, normally where they think you have something you don’t - good luck

Hi
Thank you so much for your time to reply here, if really is hugely appreciated
They are aware I have two rental properties but the issue I have is there are 2 other PG’s all of which would take the money available to far less than what is owed, meaning they would get considerably less than I have offered already.
I have explained I could give them a monthly amount but their wish to register a charge along with charging 8% interest is just unsustainable and would push me further over the edge both financially and mentally
I think you’re right re their belief that there are moneys available that aren’t there .. and a little spite too ..

Thanks again for your help with this

 

[Mark T Jones]

I may have misunderstood here - but essentially there are 2 avenues to explore, being either discounted one-off settlement or a staged payment, but not both.

Legally they are entitled to demand full repayment with immediate effect. Practically, they know that this is unrealistic and will ultimately agree to a sensible staged payment. (They also know that the courts will want to see evidence of discussion/ negotiation on their part).

Whilst it is now rare for courts or lenders to evict from the principle home, BTLs are a different matter - have you explored the idea of selling or even remortgaging one or both?

 

[KrisP]

Hi Mark .. thanks for the reply on this

I have offered them circa £90k of a £140k debt having already paid £5k .. I have also already remortgaged my home to keep the business afloat prior to.. and have served notice on the buytolet with equity in it, however that is now a 6 month process and I was using this borrow money off family to make the offer of £90k

My only other option is £40k now and a further £60k over the next 12 months when the property sells

 

[Lisa Thomas]

Hello OP.

Sorry to hear this.

Yes they can pursue you for the full amount, assuming the PG is valid etc.

Yes that means they can make you Bankrupt. The Trustee in Bankruptcy has a duty to realise your assets and could ultimately repossess and sell the property on a worse case scenario.

Are you using insolvency solicitors to negotiate this debt?

How much equity is your share worth?

How much are your other creditors?

 

[Lisa Thomas]

IMO a court is unlikely to make you homeless.

If Bankrupted, the debtors rights only outweigh the creditors rights for the first year of Bankruptcy.

After that the Trustee can apply for a repossession and sale order for the property, which is likely to be granted in normal circumstances (assuming there is no third party willing and able to acquire the Bankrupt's interest from the Trustee).

 

[Elliot Green]

This is why I was asking for advice Mr Green .. I have been paying them nearly £2k per month and have offered them a large payment as they would get a lot less if they petitioned for bankruptcy due to other deals made with other creditors .. their solicitor also suggested a deal would be preferable and the business circumstances were identical In the instance of the 62% deal ..

I was merely seeking another opinion on the matter, I appreciate your input ..

I may have misunderstood here - but essentially there are 2 avenues to explore, being either discounted one-off settlement or a staged payment, but not both.

Legally they are entitled to demand full repayment with immediate effect. Practically, they know that this is unrealistic and will ultimately agree to a sensible staged payment. (They also know that the courts will want to see evidence of discussion/ negotiation on their part).

Whilst it is now rare for courts or lenders to evict from the principle home, BTLs are a different matter - have you explored the idea of selling or even remortgaging one or both?

In my experience, it is not all that rare for courts to grant orders to evict people. It is rare for a creditor with an undisputed debt to be unable to ultimately obtain an order for possession.

Like any Trustee in Bankruptcy or someone as a Liquidator (when I might need to enforce a charging order as a judgment creditor) in my experience in the last 20 years, it is relatively rare to have a court refuse to provide a possession order.

However, it is rare to obtain a possession order (either on the back of a charging order or a bankruptcy order) at a pace that ranks faster than glacial because litigation often tends to move like molasses and the Courts tend to generously give people plenty of time to make arrangments before they issue the warrant to evict.