Signed as a deed

[R0b]

Re: Signed as a deed

Directors are collectively part and making transactions in the name of the company, but any guarantee the company makes are only binding whilst the company is still operating. If the legal company dies so do any debts belonging to the company, ie in its name. A guarantee to a bank in the legal company's name by the company's directors without the bank taking a charge on the property is no exception. It is the bank's imprudence not to secure its interest via property charge, lien or other useful security. This is the nature of commercial law - priority of debtors - legal mortgage, charges....all others are unsecured debtors.

I think you might be mistaken, as the title puts it, this sounds like a personal guarantee, not a company one and obviously this can be confirmed if the OP can provide a copy of it. If the guarantee is signed in the name of the directors on behalf of the company the bank's claim will fail as you quite rightly put it, the company is now dissolved.

However in the case of a personal guarantee this is not the case because the person or persons signing the guarantee are accepting personal liability if the company fails to make its payments. Another example is guarantors being used for tenancy agreements - if the tenant fails to pay then the landlord can seek payment from the guarantor who has agreed to step in the shoes of the tenant and repay the amounts.

Guarantees have been around for god knows how long, there is an endless list of court cases regarding guarantees and to say that they are not enforceable when the courts have been enforcing personal guarantees for many many years is just wrong.

[Openlaw15]

Re: Signed as a deed

The defence of pari passu will be a non-starter I'm afraid. The legal definition of guarantee is that it is a secondary agreement in which a person (the guarantor) is liable for the debt of another.

Yes all creditors are on equal footing with the company but does not apply to guarantees because that person has essentially agreed to cover the payments should the ltd company fail to do so. It is a secondary obligation which supports the primary. Most of the time, banks will require a guarantor because they may have doubts about the business being able to repay the amount and is additional security if the ltd company fails. However within the Guarantee document I wouldn't be surprised if there is an indemnity clause in there which then creates a primary obligation meaning you are responsible for another's loss.

The starting point will be that the deed has not been validly executed due to no signature of the bank.

Has there been any other amendments to the guarantee over time?

Why would a bank have preferential status? If the bank does not have a charge for the amount owed there is no reason why the bank should be secure or preferential creditor. The bank without adequate security is no more of a priority than a small business which was prudent enough to pay for a charge, which can then realise its interest at the point of the company's liquidation. Every other non secure creditor owing to their imprudence has to take the crumbs like everyone else.

[Openlaw15]

Re: Signed as a deed

I think you might be mistaken, as the title puts it, this sounds like a personal guarantee, not a company one and obviously this can be confirmed if the OP can provide a copy of it. If the guarantee is signed in the name of the directors on behalf of the company the bank's claim will fail as you quite rightly put it, the company is now dissolved.

However in the case of a personal guarantee this is not the case because the person or persons signing the guarantee are accepting personal liability if the company fails to make its payments. Another example is guarantors being used for tenancy agreements - if the tenant fails to pay then the landlord can seek payment from the guarantor who has agreed to step in the shoes of the tenant and repay the amounts.

Guarantees have been around for god knows how long, there is an endless list of court cases regarding guarantees and to say that they are not enforceable when the courts have been enforcing personal guarantees for many many years is just wrong.

If the director/s did not make the guarantee transaction in the name of their legal company it will have been a very foolhardy thing to do. This is point of having a legal company so it seems logical the directors would have had this foresight.

[Ripped-Off]

Re: Signed as a deed

I think that is what the OP has said that he did.....he gave the guarantee in his own name...creating a contract between himself and the bank that I suspect would survive beyond the collapse of the company. If that is the case, what we have to figure out is how we can help the OP render that contract unenforceable.

[wales01man]

Re: Signed as a deed

It was a personal guarantee to the bank to repay them if the company cannot pay it cannot die with a ltd company maybe Openlaw you can tell the banks and their legal advisors they are wrong or at least say it is on here this talk of guarantees not being enforceable so the legal profession knows

Time limits might stop enforcement that's the way forward for the OP

[R0b]

Re: Signed as a deed

Personal guarantees are well founded so I agree we should start looking at any resolutions.
[MENTION=83846]pobrm[/MENTION], please can you post up a redacted copy of the guarantee for us to review?

Your only argument so far is a defective deed resulting in the amount statute barred.

You could have alternative arguments such as economic duress if you felt you were pressurised into signing the agreement by the bank.

There could be other arguments made such as not being told to seek legal advice but again without the document it is not worth speculating.

[pobrm]

Re: Signed as a deed

No amendments made over time. You think I should concentrate on the lack of signature by the bank?

[pobrm]

Re: Signed as a deed

Appreciate all the posts. I will get a copy on here asap

[pobrm]

Re: Signed as a deed

[pobrm]

Re: Signed as a deed

Not sure how this all works but will also attach in pdf

[pobrm]

Re: Signed as a deed

Here are all the pages to the Guarantee

[charitynjw]

Re: Signed as a deed

Hi
Looking for advice on a directors guarantee which I gave to cover a business overdraft. The business went down in 2008 and no payments made on the account since then.
The directors guarantee says 'signed as a deed' on it. Does this mean it stands for 12 years, or has it now timed out, statute barred.
The original load was with a high street bank who have allegedly sold the account to 1st credit.
Any help and advice would be greatly appreciated.

If it were me, I would wonder why the bank has sold the supposedly rock solid guarantee to a third party.
Something 'feels' fishy.........

[Openlaw15]

Re: Signed as a deed

Hi
Looking for advice on a directors guarantee which I gave to cover a business overdraft. The business went down in 2008 and no payments made on the account since then.
The directors guarantee says 'signed as a deed' on it. Does this mean it stands for 12 years, or has it now timed out, statute barred.
The original load was with a high street bank who have allegedly sold the account to 1st credit.
Any help and advice would be greatly appreciated.

Key terms: "director's guarantee" ..."to cover a business overdraft." It was clearly intended as commercial transaction by commercial entity, ie a legally incorporated company.

We know if a person makes a commercial or consumer transaction, as the distinction in one is made in the course of a business and the other one is not, ie consumer's loan. The Op believed the guarantee relates to business loan, ie a commercial transaction. The documents he provides mention the terms 'customer' but not consumer. If it mentioned consumer on that basis the transaction would likely have been interpreted by the court as a personal transaction or consumer transaction, and not commercial transaction by the Op's limited company to another legally incorporated company, ie the bank. In terms of a point in law if the business is company the rule is the reference must be to its legal personality, ie the Ltd company. If it is sole trader then the point of law is not the name of the business but the name of the person running it. The Op's guarantee docs also mention the terms "liabilities for company" and "by the "working directors only" There is no mention of any barring of paris passu principles. Nevertheless, the bank has assigned this receivable (right to attempt to claim the debt) to a third party debt collector. It thus my reasoned view there is a tremendous doubt that said third party could claim for the debt as the bank was likely barred by pari passu and if the main creditor cannot claim against the guarantor it is beyond any point of law that am aware of.

[Openlaw15]

Re: Signed as a deed

Personal guarantees are well founded so I agree we should start looking at any resolutions.
@pobrm, please can you post up a redacted copy of the guarantee for us to review?

Your only argument so far is a defective deed resulting in the amount statute barred.

You could have alternative arguments such as economic duress if you felt you were pressurised into signing the agreement by the bank.

There could be other arguments made such as not being told to seek legal advice but again without the document it is not worth speculating.

No Rob, your advice concerning commercial law appertaining to complex issues such as guarantees affecting insolvent companies, I believe is probably mistaken. I have stated the law as I know it to be in my opinion, have explained my reasoning and application to the Op's facts. I am not just guessing - I have studied a qualifying law degree and know that commercial law and practice which is what I have also studied, is light years away from academic qualifying law. Ergo, I know how commercial lawyers think. The bank manager had a duty to investigate whether a guarantee would be sufficient security against the business loan. For instance, if it were the case that the company was struggling it is likely the company would cease trading. In this forecast the guarantee is a foreseeably problematical securitised remedy. Even an hypothetical equivalent comparator, ie an equivalent banker in view of the objective duty of care standards would be liable for negligence. Nevertheless, pari passu is a very good commercial defence in the Op's position. I think the argument of omitting a signature in absentia or in lieu of an actual substantive pari passu defence is rather foolhardy. If the Op accepts there was a contract it means that his company's liquidation in terms of the guarantee's effect was none affective. Notwithstanding these things, the guarantee documents also has indemnity terms. It's my knowledge that these type of commercial transactions do not require a signature. Insolvency law on the other hand is a different creature all together and, legally speaking, defeats contract terms, indemnity clauses, director's guarantees, the only thing is does not defeat, according to my education is actual security such as land charge or floating charges et al.

[R0b]

Re: Signed as a deed

[MENTION=77627]Openlaw15[/MENTION] I haven't managed to look at the guarantee yet but the gist of your post there is basically that any company who who enters into a guarantee whether it is a personal guarantee or even a parent company guarantee, is no longer enforceable when a company is dissolved? Is that what you are saying?

Why is the defence that of a defective deed a foolhardy one? Given your relevant posts on wills and probate you should know the requirements of a deed so I'm a bit surprised as to why you sugges that it is a poor argument.

Let's say for example, the DLC brings a claim against the director personally for the recovery of sums outstanding. Why would pari passu be a good defence to plead? Surely if the company is dissolved and the guarantee is ineffective then the defence pleaded should be that the DLC has no standing against the director because it was the Ltd Co who took out the loan not the director.

I am also curious about your credentials so Id be grateful if you could enlighten me as to how long ago you did your law degree? Also what are your sources that you use to back up your claims? Are these the same books when you did the degree or something else? Do you have any experience working in practice?

I have to be honest some of your answers are very dubious and contain a lot of waffle it looks like your taking it straight out of a textbook verbatim - not to mention your legalese!