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Nasty West - P/Guarantee

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  • Nasty West - P/Guarantee

    HI
    This is my first time to this site.

    In 2004 I was a director of a successful company that had been trading for 4 years and with 22 people employed. All of our tax affairs and Vat were up to date and effectively this area of the business was run by the company accountants on a monthly contract.

    In 2004 on the advice of our accountants we entered into an Invoice Discounting Agreement with RBS. As part of this agreement the company had to move banking facilities to Nat West Commercial Banking.

    It was agreed that a meeting would take place at the company's offices where all of the parties concerned would agree how the finance operation would interface with the company accounts. The Nat West bank manager, RBS Relationship Manager, the Company Accountant and myself in attendance.

    It was agreed that RBS would be able to take all of our clients including our European based clients in France. Credit ratings would need to be established. All proforma invoicing to these European Clients would have to cease immediately but RBS would honour all pending invoices. Given that it was Dec 04 and Christmas - RBS would establish the credit lines during Jan 05.

    The Natwest Manager suggested an overdraft attached to the day to day company account to ensure that the company did not runout of money over weekends, if RBS could not facilitate the transfer of funds in time. This was agreed at £30K but I would have to sign a guarantee. Given the above credit position with RBS had been established, I agreed and signed on that premise.

    Spin forward 6 months to June 2005 when I receive a letter from RBS to advise me that they had been unable to get sufficient credit rating on our European Clients and that therefore all outstanding debts were not covered. They immediately withdrew sufficient funds from our holding account on the Invoice Factoring Facility that amounted to over £150K and left the company with nothing to trade with.

    Effectively the company was forced into administration through no fault of its own.

    The company was closed with Debtors of £238K and owing RBS £101K.

    Nat West have been relying on my guarantee ever since.

    The administrator has been frustrated by RBS as they have never been able to acessertain how much was collected on the book debt.

    The solicitors for Nasty West have refused to contact RBS siting the Data Protection Act.
    However they sent to me under full disclosure a bunch of internal emails form RBS/Nasty West that clearly demonstrate that a discussion was taking place prior to the closure of the company. Even to the point where the RBS risk manager is asking the Nasty West manager what security they held on me. AND what he thought that the Groups position was at that point.

    Each one of these is a clear breach of the Act and I have complained to the ICO / FO & FSA as Nasty West's solicitors are attempting to distance their client and have told me catagoricaly that they trade separately. NOT SO.

    Role up to 2009 and Nasty Wests solicitors were able to get a Final Charging order to secure the original guarantee of £30 + fees and interest that now attract a further £14+K against my half of my family home.

    Role up to 2010 and this week I have received a Stat Demand from Nasty West's solicitors demanding payment of the "Unsecured" debt and siting the Final Charging order that was attached. They also attempted to insert that £4500 interest had accrued since the order in 2009 and some, I believe wanted a Judge to assess that this was unsecured. Nasty and Underhand tactic, since the order in 2009 clearly stated that additional interest could accrue against the order.

    If you find yourself in a similar position
    (1) Make sure that the original debt is secured along with additional interest that will
    accrue until you pay it off.
    2) Site Section 269 of the Insolvency Act 1986 - Creditor with Security
    3) Site Section 271 to the Court as this details that a Court cannot award judgement to
    the petitioner if the debt is secured.
    4) Report the Solicitor concerned to the Law Society.
    5) The Bank to the FO / FSA and OFT.

    And my questions following all of this is ;

    1) My guarantee to Nat West for the overdraft was signed on the understanding that RBS credit line facility would be able to pay this off at any time.

    2) By RBS taking 6 months to come back to the company to inform them that they could not get the approved Credit ratings to cover the now expand debts of over £150K and by immediately removing the funds from the finance facility - this had a material effect on the original agreement as it represented over 80% of the funding arrangement.

    3) Given that I had agreed to be the guarantor on the Nasty West account based on the company being able to pay of the overdraft, I would never have entered into this arrangement without RBS agreeing to take these European Accounts.

    4) By RBS' actions they have had a material affect on the original agreement and given that Nasty West were in daily conversation( albeit that they do not want to agree this).

    RBS should have written to Nasty West and in turn Nasty West should have informed me as this affected my p/guarantee.

    I am siting the following general rule;

    The liability of a guarantor under a personal guarantee is always contingent on the underlying obligation which it is actually guaranteeing.

    If the parties to the underlying obligation decide to vary the obligations to the extent that the variation could be considered detrimental to the guarantor without first securing the guarantor's consent, then the guarantor may be able to argue their liability under the guarantee will be discharged. This general principle was established in the case of Holme -v- Brunskill [1877] 3-QBD495.


    I would be interested on views as I am thinking about preparing a case siting Holme - v- Brunskill as the basis of my argument.

    It has been 5 long years but the truth will prevail and one question is what have RBS done with £120K of collections that should have come back to the creditors.

    CD

  • #2
    Re: Nasty West - P/Guarantee

    When you are factoring, or invoice discounting, they should send you a statment every month of what has been happening with the account - did you not get these? The company i work for was invoice discounting with RBS Invoice Finance, i unfortunatley was the one who had to administer it and to be honest found that they were worse than useless. However, we did get a statement every month. Perhaps an SAR to RBS? This should show all info they have on the compnay etc and may produce statments, which would in turn show up any payments received. There is a Client Account and a Debts Purchased Account usually on each statement.
    Is no longer here

    Comment


    • #3
      Re: Nasty West - P/Guarantee

      HI
      Thanks for your reply.
      The company is now long gone but when it was alive and kicking we did get a visit every month from someone at RBS who audited the account in our offices with the book keeper and accountants in attendance.

      The debtor/ creditor position was confirmed by our accountants and a printout of the RBS intranet position was given to the administrator when he walked in through the door.

      RBS have been completely negligent in their approach and have stonewalled for 4 years.
      The administrator did start to collect but had the debts taken away from them by RBS on the grounds that they officially owned them and that they had to reconstruct the ledger. (whatever that means).

      An SAR would not help as I do not own the company and have no claim on the debts. They would simply not send the info.

      Nasty West has left me holding the baby but I believe that I have grounds to issue proceedings against them using the Holme-vs.-brunskill case as my basis.

      Any thoughts and comments gratefully received.

      CD

      Comment

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