Trade Supplier PG been called, Questionable?

[Tank5315]

Hi All

I would appreciate some advice if possible with regard to the validity of PG that I signed along with another director, whom completely screwed me over and absconded, 2019 was probably the most difficult year in trading for 16 years that culminated me having no choice but to place the company into CVL after being bullied by this creditor despite having payment plan in place, that was fully honoured. Out of the blue without any notice they issued a winding up petition that had lies on it that I can prove. I appreciate I will need to probably need to seek formal advice but just testing the waters at this point to see if I have any chance of saving my family home.

Anyhow to cut long story short the fall out is that I have had a 7 day demand (Not Statutory) for payment of for large sum of money in relation to a joint several PG with a trade supplier. My possible reasons to dispute are below and was just looking for opinions as to how valid they are?

1. They are chasing me for the full balance . At the time of signing, over 7 years ago, I did not understand what Joint Several meant, so I asked the question via email from our account manager, who replied in writing with the following: "The form says jointly and severally – which relates to multiple guarantors – jointly if two- severally if more than two.In the case of XXXXX – the guarantor liability will be split equally between the directors" I now know this incorrect but would this invalidate the PG based on the fact I was misled and signed on this basis or would I still be liable for half which is still better than the full amount.
2. The signatures on page 2 are in the wrong boxes i.e Guarantor 1 named on page 1 has signed in guarantors 2 box on page 2, and vice versa, relevant?
3. Further to the last point no home addresses were on the form only the business address beside both directors names on page one, now XXXX. does this mean we signed as directors and therefore potentially invalidate the PG?
4. Should this PG have been executed as a deed?
5. Anything I have missed link of PG below with omissions;
6. It does not allow me to posts links or images so pg pasted below

Thanks in advance!

To: xxxxx xxxxx xxxxx xxxxxxxx xxxxxxxx
Guarantee & Indemnity for the Supply of Goods
In consideration of your, having at our request agreed to provide

XXXXXX LTD (Co.RegXXXXXX) (theTrader) of XXXXXX with a trade credit facility (Trade CreditFacility).


Now We, (1) MR xxxx xxxxx of COMPANY REGISTERED ADDRESS

(2) MR xxxx xxxxx of COMPANY REGISTERED ADDRESS

Agree with you as follows:

1. We will guarantee and be answerable and responsible to you for the due payment by the Trader for all sums owed under the Trade Credit Facility from time to time, but our liability under this guarantee shall not at any one time jointly or severally exceed the sum of £60,000.00(Sixty Thousand Pounds).

2. This Agreement is to be a continuing Guarantee in respect of the whole debt owed by the Trader under the Trade Credit Facility from time to time subject to the above limitations.

3. You may, without notice to us at any time and without in any way discharging us from our liability under this Guarantee:

3.1 grant time or other indulgence to the Trader,

3.2 accept payment from it in cash or by means of negotiable instruments;and

3.3 treat us in all respects as though we were jointly and severally liable with the Trader to you instead of being merely Guarantor for it.

4. You may at any time or times, at your absolute discretion and without giving any notice whatever to us, refuse further credit to the Trader.

5. We will at all times fully and effectively indemnify you and all persons claiming through or under you against all actions, proceedings, losses, costs, claims, demands or expenses whatsoever that may be taken or made against or become payable by you by reason of your dealings with the Trader.

6. This Guarantee shall be revocable at any time by 60 days notice in writing given to you or your duly authorised agent by us or, in case of death by our personal representatives.

7. Any notice required under this Guarantee to be given by any one of us shall be sent to you and any other party to this agreement at the address mentioned above. Any such notice may be delivered personally or by recorded delivery post Any notice given by post which is not returned to us as undelivered shall be deemed to have been given 48 hours after posting; and proof that the envelope containing such notice was properly addressed and sent by recorded delivery post, and has not been returned to us, shall be sufficient evidence that such notice has been duly given.


8. We agree that the benefit of this Guarantee in full or in part may be assigned by you to any third party.


Page 2


Guarantor 1

Signed.............................................Date


In the presence of..........................................(print Name)
Address........................................................................................
Occupation

Guarantor 2

Signed.............................................Date



In the presence of..........................................(print Name)

Address........................................................................................
Occupation

 

[Mark T Jones]

I’m guessing on Point one you’d be justified in claiming you are only liable for your portion of the liability

beyond that I fear you’re clutching at straws, though a good lawyer might swing it for you

 

[Mr D]

Usually with joint they appear to chase both for full amount, first one to pay clears the debt and that person chasing the other for half is nothing to do with creditor.

Point 3 - how exactly did you sign it? Straight signature or signature with some words added?

 

[obscure]

1. They are chasing me for the full balance . At the time of signing, over 7 years ago, I did not understand what Joint Several meant, so I asked the question via email from our account manager, who replied in writing with the following: "The form says jointly and severally – which relates to multiple guarantors – jointly if two- severally if more than two.In the case of XXXXX – the guarantor liability will be split equally between the directors" I now know this incorrect but would this invalidate the PG based on the fact I was misled and signed on this basis or would I still be liable for half which is still better than the full amount.

I am afraid I don't think this is going to help you. It isn't the other parties responsibility to give you legal advise, you should have consulted a lawyer. Unless the account manager in question was himself a qualified lawyer it would be entirely possible for him not to understand either (or to convince a court that that was the case). Him being wrong does not necessarily constitute mis-selling. I believe you would need to show proof that he deliberately lied to get the agreement overturned.

 

[Tank5315]

I’m guessing on Point one you’d be justified in claiming you are only liable for your portion of the liability

beyond that I fear you’re clutching at straws, though a good lawyer might swing it for you

Thanks Mark, yes hopefully, the other points are just throwing everything at it to see if anything sticks.

 

[JEREMY HAWKE]

You have stated that an SD has been issued . It is well know that many SDs are never acted upon due to the high costs of making a person bankrupt
Do you feel that this may actually take place and was the SD served correctly

 

[Tank5315]

Usually with joint they appear to chase both for full amount, first one to pay clears the debt and that person chasing the other for half is nothing to do with creditor.

Point 3 - how exactly did you sign it? Straight signature or signature with some words added?

Thanks for your reply Mr D

On page one at the top where its states:

Now We, (1) MR xxxx xxxxx of COMPANY REGISTERED ADDRESS

This was my full name followed by the companies registered address

on the signature page as per below it was literally just a signature and date with witness details in the space provided

Guarantor 1

Signed.............................................Date


In the presence of..........................................(print Name)
Address........................................................................................
Occupation
on the signature page it was literally just a signature and date next to the witness details in the

 

[Tank5315]

You have stated that an SD has been issued . It is well know that many SDs are never acted upon due to the high costs of making a person bankrupt
Do you feel that this may actually take place and was the SD served correctly

Jeremy Thanks for the response, sorry it may be the way it is written but no they have only issued a 7 day demand not and actual Statutory Demand as yet unless they have really messed up, I do feel the way they have dealt with me thus far that they will push it all the way.

 

[JEREMY HAWKE]

Well I am less panicked for you that I was when I went through your OP and I did miss your point
They may be prepared to push things but would they still do that when they have to start spending money with no guarantee of payment .

As the usual suspects have said it would be good to have a solicitor look at it

 

[Mr D]

Thanks for your reply Mr D

On page one at the top where its states:

Now We, (1) MR xxxx xxxxx of COMPANY REGISTERED ADDRESS

This was my full name followed by the companies registered address

on the signature page as per below it was literally just a signature and date with witness details in the space provided

Guarantor 1

Signed.............................................Date


In the presence of..........................................(print Name)
Address........................................................................................
Occupation
on the signature page it was literally just a signature and date next to the witness details in the

From what I was told, signing your name personally is accepting it personally.

 

[Mark T Jones]

It's far from a straight-forward situation.

It is clear that you signed the agreement of your free will and in full knowledge of its content/import - with one area of clarification. Mind you, 'I didn't know what I was signing' seldom works on corporate contracts anyway.


There are some administrative discrepancies, which most courts would overlook.

You could appoint a lawyer with some chance that they could play the system and get you off - the downside being that if you lose you will have accrued significant extra costs. Most lawyers will give you a free 30-minute appraisal. Be sure to choose one that specialises in commercial contracts.

You could argue the toss over the joint and several bit and reach an agreement to pay your portion (in the first instance I wouldn't appoint a lawyer to do this)

You could just bluff it out - but this appears to be one aggressive creditor!

You could look at personal insolvency options - possibly in conjuction with one of the above.

 

[ComPropSolicitor]

Definitely go and speak to a solicitor. Sounds like you haven't taken any advice regarding the PG and usually it is a requirement to do so (especially with lenders) as to would not taking it help you it certainly helps with an argument of you didn't know what you were signing and people have got away with liability in the past that way - but, a litigator is the person you need.

Joint and several btw means that they can come after you jointly or separately without using any sort of logic. It does NOT mean there is any entitlement to pay the other half if one of your pays the whole amount - although this would be logical.

 

[Alison Moore]

I think if the account manager provided incorrect information then you would have a case that you entered into the agreement under false information. You should have obtained independent legal advise before signing it, however their account manager should not have misled you - it wouldn't let you off the hook entirely but might help in your favour, with reducing your liability or being able to pay it back over a longer term. The rest I'd say wouldn't be relevant as they're merely administrative errors and don't effect the legal nature of the contract. Definitely speak to a solicitor though, something like this can be very difficult to handle without the correct legal advice.

 

[Spongebob]

Firstly, go and see a good solicitor specialising in this area. Not a High Street jack of all trades bloke.

Secondly, prepare for the worst.

What are your personal circumstances? Do you have assets such as equity in a house?

Trade creditors like this often push their guarantor debtors into personal bankruptcy as a matter of course in order to set an example to others. Travis Perkins for example, are notorious for it.

 

[JEREMY HAWKE]

Firstly, go and see a good solicitor specialising in this area. Not a High Street jack of all trades bloke.

Secondly, prepare for the worst.

What are your personal circumstances? Do you have assets such as equity in a house?

Trade creditors like this often push their guarantor debtors into personal bankruptcy as a matter of course in order to set an example to others. Travis Perkins for example, are notorious for it.

Yes Bob and I certainly hope it is not Travis Perkins that the OP signed the PG with

Once again this highlights the implications of signing any personal Guarantee.
If you sign a PG you must effectively ensure that you already have the funds in place to satisfy it should for any reason the debt need to be paid by you personally .This will be valid until the day you drop down dead !

 

[Ian J]

This will be valid until the day you drop down dead !

Or they release you in writing from any obligations under the PG

 

[JEREMY HAWKE]

Or they release you in writing from any obligations under the PG

I would not be releasing anybody if I was owed by way of PG until the money was payed back to me ! and nor would you

After all this trouble and strife in a lifetime it is easier to see it from both sides of the table

You are a dunb ass for giving too much credit or lending money

You are a dumb ass if you secure or sign a PG against your assets .
It is that basic !

 

[Spongebob]

I would never sign a PG unless I had made sure that the house was in my wife’s name.

 

[Mr D]

I would never sign a PG unless I had made sure that the house was in my wife’s name.

And never divorce.
Sadly some have found out later that sticking stuff in wife's name was a really bad idea.

 

[MikeJ]

I personally guaranteed an overdraft with RBS when we were first setting out. They specifically asked to see assets that they could call in, but that couldn't include the house. The guy said making people homeless wasn't good publicity.

It does seem strange when you ask someone to lend money to a company and personally guarantee to repay it in the event that the company can't, and then seem surprised that the company wants their money back. I appreciate that circumstances change and things happen, but the meaning is in the title - it's a personal guarantee.

 

[Chris Ashdown]

You are going to pay something whatever happens

My suggestion would be to write to the company with a copy of the letter from the manager and state you acted on his advice that what he stated was true and company policy, you accept you are responsible for only half the total dept, but do not have the money available to make a full payment, and therefore would be happy to consider a reasonable payment plan over a extended timeframe

Then see what they reply

 

[Mark T Jones]

I personally guaranteed an overdraft with RBS when we were first setting out. They specifically asked to see assets that they could call in, but that couldn't include the house. The guy said making people homeless wasn't good publicity.

It does seem strange when you ask someone to lend money to a company and personally guarantee to repay it in the event that the company can't, and then seem surprised that the company wants their money back. I appreciate that circumstances change and things happen, but the meaning is in the title - it's a personal guarantee.

Getting borrowers to read or acknowledge a PG is actually very difficult. When signing one I freely tell them what the implications are - often in very blunt terms. Nobody has ever not signed. Sometimes, signing a PG involves initialing up to 6 page, Sometimes they also need to print and sign a letter saying they don't want legal advice (or of course to take legal advice, which never happens) - they just see it as boring admin in the way of getting money.

Post bail-out, banks were 'strongly discouraged' from treating the family home as security (unlike the recession of the early 90s where many lost their homes). The EFG still doesn't allow the family home to be used as security.

This doesn't apply however to the non-bank sector.