Personal Guarantee and Transferability

[dsgg10]

Originally posted on MSE and the advice was there to come here hopefully ok for a Newbie post

Ltd company, formed 2010 (3 Directors) > 1 Director (me) by 2018 > Finally Insolvent 9 months ago.

Back in 2010 we took a loan with a high street bank. Required a PG (for me unsecured) to be signed by all directors.
By 2015 loan was repaid, but the company also had an overdraft with said bank. Also had a company credit card
By 2021 took bounceback loan through the same bank to try and keep the company afloat
By Mid 2022, finally had to admit defeat and call in the IP.

So after 9 months the bank have decided that either I (or even the 3 original) directors are personally liable for the O/D - even though the actual loan was repaid years earlier.

Essentially boils down to a phrase in the original loan - "Customer's Liabilities: means all money and liabilities of whatever nature now or at any time in the future due, owing or incurred from or by the Customer to the Bank anywhere and in any way, whether alone or jointly with anyone else, including:
(i) interest, commission and banking charges now or at any time in the future due or owing from or by the Customer to the Bank; and
(ii) legal and other costs, charges and expenses (including Value Added Tax on such items or any similar tax) incurred by the Bank in obtaining or reasonably attempting to obtain payment of the Customer’s Liabilities by the Customer;"
So it seems, with hindsight, that we "all 3 original directors" should have written to the bank to be released from the PG once the loan was paid. We didn't but hopefully valuable to someone reading this

The PG limit is actually close to the O/D when insolvent, £15K, and the bank now want me (and including my partners income) to create a payment plan (if I can or wont, they will go after the other two original directors!!)... What should I do here, just accept that I will have to pay a plan? I raised a complaint with them, me suggesting that this wasn't transferable. They rejected the complaint on the basis of the above, but stated we could appeal to the ombudsmen.

They also suggest they are open to an offer... I don't have any savings it all went into trying to keep the company going, but my partner might consider it (but is irked that they want that income declared) - if we did go this route typically what will they likely accept

my final concern is that once we make any payments on the O/D debt, they will use the wooly PG to try and reclaim the BBL and Credit Card debts too

Any advice gratefully received

[atticus]

By reference to the quoted wording, this is an 'all monies" guarantee, and not a guarantee just in respect of the original loan.

As guarantor, you cannot be required to pay more than the sum guaranteed, even if the company has other debts.

[dsgg10]

Thank you atticus

So legally they can do this xfer of liability from original loan to the O/D? For others reading (should we have written to the bank asking to be released from the PG when the loan was paid)

What is likely their intention with the 1 remaining director (me) vs the 3 original?

I get the sum guaranteed point, but my fear is they just wait until parts of the O/D liability is paid off and then they say "ah but you also owe this" continually topping back up to the 15k limit? - Is there a mechanism that says they have to consider this all in one go as a total amount lets say 50k, but the PG limits the liability to just the 15k?

Thanks again for the advice

[atticus]

It is not a "xfer [sic] of liability". You agreed to be liable (up to an agreed limit) for all money owed by the company to the bank.

[dsgg10]

Thanks again atticus I understand, so is that a one time calculation - presumably when the IP notified the bank so the other debts BBL and CC cant be retro added again later? just want to get some finality, if this 15k is it then so be it - will have to next work out a payment plan with them?

[atticus]

If bounce back loans and credit cards are money owed by this company to this bank then of course the come within the scope of the guaranteed debts.

[dsgg10]

right but the combined total of OD+BBL+CC is significantly greater (lets say £50K) than the £15K maximum liability on the PG. I'm trying to understand if the maximum they can ask for is 15K or if they can keep drip feeding over time to try and recover the whole £50K ?

[atticus]

As guarantor, you cannot be required to pay in total more than the sum guaranteed, even if the company has other debts.

[dsgg10]

atticus Thank you - this has very helpful, much appreciated