Personal liability for Ltd Co. overdraft

[Shazzaw]

Hi all,

After another worrying night just thought someone might be able to give me some advice.

My accountant is currently in the process of shutting down the Ltd Company I have been running for the last 6 years. I have an overdraft on the Business Account which currently stands at £13K and increasing each month by £300 in interest payments.

Checking my paperwork the last thing I signed for regarding the overdraft was the annual renewal form I got to keep the OD in place. It states a facility start date of Apr 06 and and Expiry Date of Apr 07.

When I initially took out the overdraft the bank wanted a Guarantee so on the latest renewal OD form above it states that

"1) the existing available guarantee security held by the bank as follows:-
a) Guarantee held for £28000.

Now I think in the past the Bank may have used my house as security but this is not stated on the form I have in front of me. Even if the house was previously used as Security I have now moved from that house anyway.

Within the last week - and whether this is a consequence of the Bank getting wind of the fact that the company is being shut down - they have sent me a new annual contract to sign to continue using the overdraft facility.

I'm not going to sign this but basically the new contract states the guarantee as follows:-

"1)the existing available guarantee security held by the bank as follows:-
a) Guarantee given by SHAZZAW dated 2/6/04 limited to £28,000.
b) Unscheduled Mortgage Debenture given by SHAZZAW'S COMPANY dated 4/2/04.


Basically my question is when the limited company is shut down am I still going to be personally liable for repaying the overdraft and now I have moved house can they use my new property as security to repay the overdraft.

Any advices as ever really appreciated !!

shazzaw

[Amethyst]

Re: Personal liability for Ltd Co. overdraft

''Unscheduled Mortgage Debenture'' is usually over the companies assets.

There must be some paperwork relating to the guarantee and the terms of it. From what you have put it does sound as though you gave a personal guarantee alongside the debenture.

You need to ask for copies of the original documents 2/6/04 and 4/2/04. Just do it on the basis of checking the terms of the new contract.

[WendyB]

Re: Personal liability for Ltd Co. overdraft

I'm not exactly sure about this, but if your house was used a security, wouldn't there have been a second charge on it? Thats what happened when we took out a secured loan, anyway. And if there's a charge on it, wouldn't you know? And if you are no longer living in that property, then it may well have gone by the by. Depends on what the wording was I would think. Like, if it says secured against Number 1, Joe Bloggs Street, and you now live at Number 74 I've Moved Street, then it would probably be invalid. Butif it says against Any Property that Shazzaw lives in/owns, then that would be different.

This is only a thought, and I may be well off base, but it seems logical to me. You'll have to get the paperwork and hve a look in more detail.

Thats the problem with Ltd companies, as soon as a personal guarante is given, it chucks the limited liability out the window.

[WendyB]

Re: Personal liability for Ltd Co. overdraft

sorry, posted on the wrong thread.