Joint and several personal guarantee's

[craig]

Hello,
Up until last year myself and 4 other directors ran a company that had a £60,000 od. The overdraft was secured against 5 apartments but we also signed joint and several personal guarantees.This all happened about 5 years ago and as time went on one of the Director's got himself in a mess with the drink and ran up huge credit card debt.The bank informed us he had a CCJ lodged against him and he had to be removed from his Directorship or they would freeze the company bank account.As a result of this he went bankrupt personally.

The 4 Director's struggled on but the writing was on the wall for the company and in 2010 the inland revenue wound the company up.

I would like to know the law on the guarantee's and how long the initial signing last's for. I heard it mentioned that the Bank is supposed to call an annual meeting with all Directors of the company to check that the securitie's that are in place can still cover the debt and that we are still be prepared to carry on with the personal guarantees.

At one point the flats that were put up as securitie on the OD had increased from £100,000 to£136,000 so we were well in,but now they are in negative equity and the resigned director had his flat repossessed.

The banks solicitor is now chasing me for the whole £65,445.63. I know he has to start with one of us but he wont enter into the legals on the joint &several contracts that we only ever signed once and never renewed the agreements.

Tricky one this...

[Sapphire]

Re: Joint and several personal guarantee's

As far as I know a personal guarantee lasts until the debt is repaid, it doesn't matter whether its joint or individual and legally they can go after just one of you for the whole debt.
Regards the signing and the annual meeting I am not sure about therefore I have flagged this up for someone with more knowledge to come and help you.

[MEGLOS]

Re: Joint and several personal guarantee's

In order to look at this properly we would need to see the form of the guarantee.


I have never heard of an obligation on the Bank to call a meeting with the Directors and to re-assess the position , although it would be good practice from their end to do so in case the Directors were not able to pay.


These guarantees can be terminated n notice, but the liability incurred up to the date of such termination would be due as you say, jointly and severally . You could join in the others for their contribution when sued or do a deal with them now to pay their share to stop the legal bill rising as no doubt the guarantee also says the legals will be added on an indemnity basis , rather than a reasonable and proper basis.