Sticky covid loan situation - need help fighting a bank

[chippedframe]

Hi

I have been shafted by a bank who are chasing me for a bounce back loan debt of maximum amount 50,000 that a friend took out for his business that he proposed to me over 8 years ago.

After a few weeks of promotional discussions to setup this business back in 2016 I informed this friend that I would not be involved in the business but as we did not formally incorporate any business, I assumed that's the end of matter.

The bank are now chasing me because I signed on the account opening paperwork in 2016 to open the account. I never interacted with the bank directly, the other person did. Bank hold me equally liable even though they admit I didn't take out the covid loan in 2021 and are aware I have no involvement in the business. They say original paperwork had authority for any one person to act on behalf of business.

It's complex and I realise I need to seek a lawyer however unsure whether to go down the route of a bounce back loan specialist or a partnership specialist, as the bank are treating this as a general partnership under 1890 Act. They do not hold any partnership agreement or any other documentation because simply it does not exist.

Is there any clause in 1890 act which can free me from this horrible situation? For example, is there any clause that stipulates there must be proof I was involved with the business, because apart from a few discussions in 2016 I clearly wasn't.

the loan has been defaulted on and debt collectors chasing me, placing personal liability on me so I appreciate any help I can get

thank you

[atticus]

This is not a straightforward case. The bank's awareness that you had no involvement in the business may mean that it was on notice that you had ceased to be a partner.

You need a solicitor who specialises in commercial disputes: a good one should have sufficient knowledge of the banking and partnership issues. S9 Partnership Act 1890 may help (the emphasis is mine):

Liability of partners.

Every partner in a firm is liable jointly with the other partners, and in Scotland severally also, for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in a due course of administration for such debts and obligations, so far as they remain unsatisfied, but subject in England or Ireland to the prior payment of his separate debts.

[chippedframe]

This is not a straightforward case. The bank's awareness that you had no involvement in the business may mean that it was on notice that you had ceased to be a partner.

You need a solicitor who specialises in commercial disputes: a good one should have sufficient knowledge of the banking and partnership issues. S9 Partnership Act 1890 may help (the emphasis is mine):

Thank you for this. I have spoken to a solicitor but it seems costs will far outweigh the debt amount. S9 seems interesting. I did notify the other person in 2015 of intent not to be involved in the partnership however this was just a phone call so I cannot evidence this. Bank are saying I should have notified them, which I also did not. In hindsight very naive of me but if I could have seen this coming 8 years later, I would have. Tricky situation.

[atticus]

How much is the bank claiming? I understood it to be £50K.

I agree that you should have notified the bank that you had ceased to be a partner. That would simplify things greatly. But in your first post you said

Bank hold me equally liable even though they admit I didn't take out the covid loan in 2021 and are aware I have no involvement in the business.

If the Bank admits that it knew you had ceased to be involved in the business you can make a strong argument that it was on notice. This may help you negotiate a reduced settlement.

[chippedframe]

[QUOTE=atticus;n1682216]How much is the bank claiming? I understood it to be £50K.

I agree that you should have notified the bank that you had ceased to be a partner. That would simplify things greatly. But in your first post you said

Bank hold me equally liable even though they admit I didn't take out the covid loan in 2021 and are aware I have no involvement in the business.
[/QUOTE

If the Bank admits that it knew you had ceased to be involved in the business you can make a strong argument that it was on notice. This may help you negotiate a reduced settlement.

The figure is just under 50k. The bank admitted on a call that only the other person has signed up for the loan, the loan agreement document also shows he applied for it, however they are claiming the original account opening paperwork in 2016 had "only one person's authority" required on the account / business.

[atticus]

If the figure is just under £50K why is getting someone to look at the documents and advise not cost effective? You may have been told the cost of fighting a case all the way to a contested trial.

[chippedframe]

If the figure is just under £50K why is getting someone to look at the documents and advise not cost effective? You may have been told the cost of fighting a case all the way to a contested trial.

I've been told the cost can far exceed the 50k by a few lawyers.

[atticus]

You have not understood.

That will NOT be the cost of getting some advice!

It might well be the cost of fighting a case all the way to a contested trial.

[chippedframe]

You have not understood.

That will NOT be the cost of getting some advice!

It might well be the cost of fighting a case all the way to a contested trial.

Forgive me I clearly misread your previous comment. Yes it is worth getting professional advice but unsure whether to go for a commercial lawyer, a bounce back loan specialist or a partnership law specialist.

[atticus]

I answered that question in post #2

[chippedframe]

I answered that question in post #2

thank you appreciate this

[Roadrage]

Just a question about liability here, It sounds as though you have not signed any documentation as party to a loan or business, U.N. yet the bank holds you liable because someone else says you were? If that was truly the case then we can all sign anyone we like up to a joint loan and leave them with the debt. What am I missing?

[atticus]

Roadrage you are missing that the OP signed account opening forms as a partner in the business.

[Roadrage]

Yep, missed that bit