Personal Guarantee on Business Overdraft - Options??!

[west1074]

Hi Guys

I was really hoping you may be able to give me some advice here.

I'm close to engaging an IP with my business bank balance at 24k overdrawn with a 25k OD limit, the OD has a personal Guarantee for 25k.

I'm currently setting up a new company in the background and opening up a new account in a totally different bank.

What are the chances of my current business bank who I've been with 10 years and have business overdraft with, allowing me to start up a new account in a very similar name and transfer the Overdraft facility across???

I'm not sure what to do, The new account is being set up as a fail safe, once opened Im then going to see what my current bank says??

My approach was going to be... make an appointment with my current bank and stress I have minimal assets and outgoings, so in reality I'm not going to be able to pay back the 25k OD to the them ( I have 20k equity in my property that's my half and have children )

Surely it makes sense for them to transfer a OD with PG over than pursue me and get nothing?

What are my likely options...?? If they don't allow this, what will likely happen?

Will they pursue the whole amount?

Will they convert it to a loan?

Does it affect my personal credit rating as its a PG?

Can I come to a agreement if I took a personal loan out for half?

The new business will be viable, based on totally different financial management, with less outgoings this time. So Hopefully they will transfer over.

That said,someone has told me I'm best to move banks, keep the new company separate, and see if I can reach a settlement for a much lower amount, is this even a viable option??

Bearing in mind I will be paying back a set amount to a IP each month after business is liquidated, so that will affect what I can afford to pay back to the bank? Do I speak to them before liquidator gets involved? I assume so?

Any ideas very welcome. I bank with Natwest.


Thanks

 

[Ian J]

Your present bank would be only to delighted to transfer your overdraft to another bank but I'm sure that your new bankers wouldn't be quite so pleased. Do you know that the new bank would be willing to offer you overdraft facilities as I certainly wouldn't if I were them

 

[west1074]

Hi Ian

I'm not sure I've made my post clear, looks like I haven't..

I was referring to my present company bank transferring my current company OD ( the one in trouble ) to a new account in a different name with them.

The alternative being they call in the PG and I don't have hardly any assetts or funds to pay the PG back to Natwest.

Right now I'm setting up a new company bank account with a different bank to keep this separate, but in a ideal world if I could open up a newcompany account with my present bank they give me a 25k PG overdraft, I could clear down the other one and drive the new company forward.

I guess the alternative is they pursue me for the 25k personally, which prompted me to ask:

Will they pursue the whole amount?

Will they convert it to a loan?

Does it affect my personal credit rating as its a PG?

Can I come to a agreement if I took a personal loan out for half?

It seems both the bank and I are better if they could transfer it, and perhaps look at reducing it gradually over the next 12-18 months in new company?

In case when I approach them they say No chance, I'm setting a new account up as a fail safe in a different bank.

Of course there is no chance I would be given a overdraft in new company at all, which I did know to be fair.

 

[west1074]

I would rather speak to them now, before I instruct a IP obviously.

 

[ReSolve]

There a lot of questions you raise and so difficult to try and answer them all in an email, however, I will try.

In summary, if you liquidate the business with an overdraft which you have guaranteed then you will be liable for the whole amount. You might be able to negotiate with the bank to reduce this figure. I have, in the past, seen individuals successfully negotiate quite significant discounts, however it all depends on the bank and their attitude regarding repayment.

The bank may decide to move the overdraft to a new company, although there is no guarantee that they will be prepared to do this. We recently acted as insolvency practitioners for a business in a similar situation and helped the directors successfully transfer the overdraft, which was a good result for all.

Happy to chat through all the options in more detail if this would be of assistance.

 

[ethical PR]

When a friend of mine was in a similar situation recently and didn't have the resources to make any offer of a sizeable repayment, they took him to court and put a charge on his property.

 

[Alan R Price]

See my post on your other post about this. It would be good to keep all your posts in the sane place, so you don't receive conflicting advice based on differing information.

 

[Riverbed]

Hi

Have you already opened a new business account ?

My advice:

1. Open a new bank business account first.
2. Allow your IP to tell the bank you've folded.
3. Natwest will contact you asking you to settle the amount owed.
4. They will then offer you a settlement figure or a monthly payment plan, in your case of 25k u could prob get away with 250 a month.

I'm confident that if u have no assets to pinch the bank will do it the way I've told you.

Unlikely Natwest will transfer the overdraft or concert to loan.
Any new bank would prob need to see activity/history to determine your OD is serviceable before handing you one.