Insolvency: bank not freezing account and incurring additional debt

[Tortoise71]

In Dec 2021 I placed my company into voluntary insolvency. The insolvency practitioner (IP) informed the bank in writing (Jan 2022) and requested the bank freeze the company bank account. The bank have since paid out a further £5k placing the account in overdraft which they are now coming after me for under my personal guarantee.

I have spoken to the IP who informed me that despite several letters, HSBC have not engaged with them over the Insolvency matter.

I have received a demand from HSBC referencing previous letters from them that I have not received. I emailed HSBC informing them I had not received any previous correspondence, attaching a copy of the initial letter from the IP and requesting they freeze the account. I also noted I believe they are increasing my level of financial vulnerability due to increased debt, stress, anxiety etc

They have replied to that by resending a demand letter and I noticed today a further payment went out of the account.

I am a loss as to what to do. Can you help?

[atticus]

Can you please give more information about the payments made by the bank. To whom have the payments been made?

And can you confirm whether this voluntary insolvency is creditors voluntary liquidation.

[Sam101]

A formal complaint should be made in writing to the bank, headed 'FORMAL COMPLAINT' they then have to respond in accordance with banking regulations.

[dslippy]

The bank can only make payment against an order from you - a cheque signed or an authorised direct debit. You have left them with conflicting instructions to pay and not to pay.
It seems odd that several months later they are still receiving requests for payment. Something requires explanation.

[atticus]

If the company had gone into liquidation the bank should have frozen the account on being notified of the appointment of liquidators. But who were the payments made to? Were they to other HSBC accounts such as loan or company credit card?

It will be helpful to know if there is in fact a formal insolvency process, i.e. something more than simply ceasing to trade.

[Tortoise71]

Can you please give more information about the payments made by the bank. To whom have the payments been made?

And can you confirm whether this voluntary insolvency is creditors voluntary liquidation.

The Bank have been making payments to suppliers, themselves (interest on they overdraft that they created) and for a CBiLS loan (that was through them). The voluntary insolvency was not a creditors insolvency, it was instigated by myself.

[Tortoise71]

The bank can only make payment against an order from you - a cheque signed or an authorised direct debit. You have left them with conflicting instructions to pay and not to pay.
It seems odd that several months later they are still receiving requests for payment. Something requires explanation.

I cancelled all direct debits and standing orders that I was aware of and did not issue cheques. Once the insolvency process had been started I was instructed by the IP's not to use the bank account and that the bank had been instructed to freeze the account. Once I was alerted (by text from the bank) that payments were going out I informed the IP who again instructed the bank to freeze the account.

[Tortoise71]

If the company had gone into liquidation the bank should have frozen the account on being notified of the appointment of liquidators. But who were the payments made to? Were they to other HSBC accounts such as loan or company credit card?

It will be helpful to know if there is in fact a formal insolvency process, i.e. something more than simply ceasing to trade.

It is a formal insolvency process with IP's instructed rather than simply ceasing to trade. There are/were outstanding loans etc. A large majority of the payments out were to other HSBC accounts CBILS, interest on the overdraft etc

[atticus]

A large majority of the payments out were to other HSBC accounts CBILS, interest on the overdraft etc

This is exactly why I asked. The likelihood is that these other HSBC debts were also covered by your guarantee. Ask a solicitor to review the guarantee and advise.

[dslippy]

'Large Majority' means there were others - of what nature?

[Tortoise71]

The only other loan was a CbILS, this has no personal guarantee against it.

Other payments were to suppliers for things such as shredding and IT services.

They have also been paying themselves intetest on the overdraft they created by not freezing the account.