IBAS - Independent Banking Advisory Service
Comparison on Director's Personal Guarantee Debt Claims for Joint and Several Company Bank debt claim
Updated 30th November 2023
UK Director Personal Guarantee Debt Claim or debt claim demands for a director personal guarantee for company debts?
When directors seek funding for their business they may provide cross company guarantees and may also sign a personal guarantee which is legally binding and which will circumvent the limited liability status of a limited company once bank debt recovery commences against the Limited Company.
By 2002 Independent Banking Advisory Service had already obtained in excess of £21 million in refunds, write-offs and write-down of bank debt for Business Banking customers from our successful investigations of UK Business Banking Disputes
Three directors were faced with Joint & Several Personal Guarantee bank debt claim from a Limited Company business debt claimed by the bank:
Joint & Several liability (of a legal obligation) means - an obligation undertaken by two or more people, each individual having liability for the whole.
Director ‘A’ - Director's Joint and Several Personal Guarantee debt claim was settled with IBAS advice and an IBAS negotiated settlement was achieved - the other two Directors (B & C) proceeded to court on the same Joint & Several Director's Personal Guarantee debt liability claim, one by using ‘DIY’ defending and the other using solicitor’s advice. IBAS has been able to compare the results of the directors personal guarantee advice and help directly provided by IBAS to Director ‘A’.
Director 'A' sought and then took IBAS advice from the start of the bank's claim until IBAS resolved the bank's claim. The other two ex directors (B & C) both defended the bank’s claim until Judgment was obtained by the bank - against them both.
IBAS therefore provided the best strategy to obtain the best result for Director 'A' on the bank's director joint & several personal guarantee debt claim demand.
Director ‘B’ continued with ‘DIY defending’ using ‘internet forum type’ arguments which are often completely inaccurate, unworkable or out of date.
Director ‘C’ took a solicitor’s advice and defended the bank's legal claim on the director's bank personal guarantee using that advice.
All three Directors family homes were ‘at risk’ from the bank’s debt claim which was due to the Joint & Several Director's Personal Guarantee which they had all signed.
Once we established that there was no defence to the bank’s claim and the Director's Personal Guarantee Joint & Several liability was fully and legally claimable by the bank, IBAS was totally objective and factual with our member.
Defending a bank’s claim up to judgment where a defence does not exist will incur extra legal costs. Those extra costs are inevitably added to the debt itself and that may mean the family home is lost as a result.
IBAS strongly advised our member to limit their exposure to the bank’s claim and to protect their position.
The member agreed and IBAS started negotiations with the bank’s solicitors. IBAS continued negotiating with the bank’s solicitors on our member’s behalf and advised our member at what level settlement should be aimed.
Director ‘A’ settled after IBAS advice. Any Director facing demand for payment from a director's personal Guarantee debt liability or debt claim should note that based on these figures which were calculated up to Judgment,
that - IBAS provided Director A with exceptional value for the result that we gained for them.
Director ‘B’ & Director ‘C’ continued to defend the bank’s claim right up to judgment and due to this continued legal action further costs then arose for which they were liable. Both Director ‘B’ & Director ‘C’ lost their defence and both Directors received Judgments against them personally for the full claim, which inevitably included the further costs and fees for continuing their defence actions.
Both Judgments for debt will inevitably be followed by a Charging Order over marital homes, which will also add a further fee cost plus Statutory Interest on the debt (currently at 8% per annum). However, if no payment is agreed to satisfy the Judgment Debt - the bank may also apply for an ‘Order for Sale ’ of their property.
That would require the bank to satisfy the court that this is the only way to obtain payment in order to ‘discharge’ the Charging Order and would also be the additional ‘sting in the tail’ for those continuing to defend where real defences do not exist.
Summary of results:
Director ‘A’ received IBAS's individual and specialist professional advice. IBAS advice proved to be the most effective strategy - for Director ‘A’ that meant not only did they save a lot of money - but also:
Director ‘A’ had the stress and worry of the bank’s claim against them removed. Director ‘A’ does not have their home at risk from any attack by the bank from the PG claim.
Any Director facing demand for payment from a personal Guarantee debt liability should note: IBAS provided the best strategy to obtain the best result for Director 'A' on the banks directors joint and several personal guarantee debt claim demand and IBAS value to Director ‘A’ in this case was exceptional.
Director 'B' & 'C' both face a much larger debt and and Director 'C' also paid their own solicitor's costs and fees.
Judgment against both Director 'B' and 'C' means they both face a debt of £70k more than the settlement figure achieved by IBAS for Director 'A'.
They also face extreme pressure after Judgment with a very uncertain and stressful future.
The facts from this case prove that IBAS's individual and specialist professional advice and strategy on a Directors Bank Personal Guarantee debt claim demand is extremely effective and it could be exactly what you may require.
"I am really grateful to IBAS for the support and advice received over a personal guarantee I signed with HSBC. When the business went into administration in 2008, I immediately sought legal advice with a local solicitor.
After two years of legal correspondence, I received Court Papers claiming the full amount of the debt. The guarantee was joint and several with two other business partners and it was called upon for all three of us.
After receiving the Court papers I realized I needed to receive more specific and expert advice. I found IBAS through an Internet search and after my case was accepted in Feb 2011, I was advised I did not have a defence and the most sensible option was for me to negotiate a payment with HSBC through IBAS.
HSBC eventually accepted my final offer. My other two business partners both decided to go to Court - unfortunately losing their cases and receiving summary judgments. They are now both waiting for the judgment to be executed with the risk of HSBC enforcing the order with an order for a sale of their properties.
Thank you IBAS for looking at my case so promptly and efficiently and for guiding me to make the right decision - however difficult it was." - SS Testimonial
Q. What is the major difference between IBAS and any other advice organization?
A. The depth of IBAS specialist knowledge and greater banking experience from investigating business banking dispute cases for 30 years provides IBAS members with better value and chance of success.
IBAS uses knowledge of banking case law derived from negotiating with banks on a large volume of business banking disputes and our specialist knowledge of Lender Debt Recovery Units to identify possible defences within a business bank/lender customer claim or debt dispute and then provide a proven successful strategy.
As an IBAS member Testimonial said: "What benefited us the most was your concise & well thought out advice, very good knowledge/experience of how the banks work, prompt responses and sensible/pragmatic approach".
A Joint and Several Personal Guarantee liability provides the bank with legal assurance that each of the signatories to the agreement will be held 100% liable for the full outstanding debt.
It is not (as many believe) a shared or 'proportionate debt' which may then be equally divided between the directors once demand has been made.
IBAS investigate Directors Personal Guarantee Disputes and Bank Debt Claims and can help Directors defend bank claims on directors personal guarantee debt claim disputes and avoid personal guarantee judgments.
Directors being claimed against by a bank/lender for a personal guarantee claim will have different assets and their available equity may vary considerably, That will tilt the bank/lenders strategy on debt recovery.
Any joint and several personal guarantee or joint and several mortgage agreement will state that each director or partner is liable to pay the full amount of the debt.
Joint and several liability implies that all signatories are liable for the partnership debts in full or in part individually, dependent usually on their ability to pay.
Because of that individual liability a creditor(s)/liquidator/bank debt recovery unit can pursue the guarantor with the most assets first to satisfy debts.
Then the next guarantor who has assets, then the next, onwards, inflating the debt with charges, costs and interest.
Personal Guarantees on Bank Business Debts or banking debts for Limited Companies allow the bank to claim a directors personal guarantee debt which is a debt then owed personally by the personal guarantor (the director) if the business fails or the Limited company cannot pay the debts claimed on the bank's demand.
The lenders intention when obtaining any directors personal guarantee is that if the company fails to pay for any reason then the director's personal guarantee will then be demanded for payment.
It is then claimed by the lender as being a personal debt owed by that director.
Even if a company director resigns, that may not protect them from a bank claim on their personal guarantee for debts owed by the business whilst they were still directors or partners.
If you need to have a release/discharge/end/finalize or to determine a personal guarantee you will require specific advice to make sure the Personal Guarantee is no longer relied upon by the bank.
IBAS is a professional, confidential guidance and direct assistance organisation for UK Business banking problems and disputes and an organisation which can also help you with bank claims and bank litigation.
IBAS lay the 'groundwork' for successful personal guarantee defence or banking claims defence by first preserving any defence which then exists.
IBAS have assisted in many cases which have been won by our members after litigation in the County Court, High Court and the Court of Appeal.
As TM stated in his testimonial for IBAS
This is a battle that we have won, which could quite easily have been lost had I not joined IBAS.
I would recommend them to absolutely everybody" - TM
We are aware that lenders conceal inadequate procedures, mistakes and errors (which may offer defences) and we are also aware that those concealments are rarely obvious immediately.
Only a very thorough investigation of the details in a file will flush those concealments out.
Banking Investigators need to establish if the Bank followed correct banking procedures when security was taken.
IBAS success is due to thorough investigations of a great many Business Banking case files.
Our thorough investigations are also why so many of IBAS successful cases have been resolved even after the business customer received legal advice from solicitors who had advised the customer to admit the debt and make payments.
IBAS involvement at Demand stage allows the business banking customer to continue with their work and their life whilst the Bank/Lender's concentrate their thoughts on our requests for specific information and providing information to IBAS rather than commencing legal actions.
Paul's Case: Both Paul and his brother signed a joint Personal Guarantee for their company. The company failed. The bank made demand on them both for a significant amount.
IBAS direct assistance with the Bank's Joint Directors Personal Guarantee Debt Claim Demand was requested.
IBAS assessed the preliminary documents and the brothers provided their statements as requested on what had happened, when and how regarding the 'signing' of the Personal Guarantees.
The customer's statements conflicted with the bank's documents and the Bank's explanations.
However, IBAS investigation of the first bundle of the Bank's information caused IBAS to raise our 'concerns' direct to the Bank.
But, the Banks Debt Recovery Unit dismissed our 'concerns' and refused to accept that any irregularities occurred in taking the security.
Bank Debt Recovery Units tend to believe that might is right, regardless of the evidence.
But, IBAS investigating skill and knowledge of historic cases means we have the ability to look deeper and wider into Banking Cases and are able to question not only why but also how security has been taken.
Having found a legitimate defence to the claim and also evidence to support it, which the Bank had hidden, IBAS continued to argue the merits of the customer's case.
Lawyers and Barristers are very expensive so IBAS assessed the legal position and the legal costs on the customers for defending the bank's claim - if it went to court.
IBAS were aware that lawyers and Barristers do not guarantee success.
The legal estimate of costs was considerable.
'After The Event' insurance was also expensive.
We also considered the possibility of the Bank withdrawing their claim, leaving the customer to pay their own costs. That can be a severe blow to any bank customer funding their own defence.
On the other hand Banks will 'fleece' the customer for excessive costs (created by very large legal teams) if the customer loses a defence to the Bank's legal claim.
Therefore, IBAS continued engaging the Bank in negotiations and requests for further information to establish a trail of evidence for our use later.
IBAS progressed the case with the Bank direct and on behalf of the customers.
The customers carried on working, without worrying about what to do next and without the constant stress of contact with or from the Bank.
IBAS negotiations prevented large legal costs and the Bank issuing a legal claim.
Eventually, an acceptable compromise was agreed.
As this prevented any risk to the customer's homes the case was settled.
(Customer's Testimonial provided)
The moral of this extremely good result for the customers is that IBAS knowledge, skill and in depth investigations put to use immediately after the Bank demand together with IBAS individual and specialist professional advice and strategy for a Directors Bank Personal Guarantee debt claim demand not only protected the customer's homes but then also prevented both homes being eventually 'taken' by the Bank.
IBAS aim is always to resolve a Business Banking Debt Claims before litigation and also to protect the business customer's assets
"I discovered IBAS via a Google search for “personal guarantee advice”. Until this point I didn’t know that such an organization existed.
At the same time I had also started talking to a number of solicitors about my position.
The reason that I put my faith in IBAS was that it was clear they had extensive knowledge about PG’s. It seems to be a very specific area of law and whilst the solicitors were very gung ho it was clear they did not have as much specific expertise as IBAS.
Since taking on my case IBAS have provided detailed, accurate and realistic advice.
They are comfortable handling the various tactics deployed by the banks and provide strength and support during what can become a very stressful situation.
I would probably have caved in or lost had IBAS not been handling my case."
- MJ Testimonial
We have found over time through our investigations that what was said before the personal guarantee signing or before other security for borrowings was taken is probably the most contested banking relationship dialogue.
Banking exams specifically cover all aspects of taking valid security for bank beneﬁt and also how the bank will enforce on it later when required.
bankers are well aware of the legality of a signed Personal Guarantee.
But, due to the bankers quest to obtain the maximum security for their lending and pressure for meeting loan/account/security targets, it is often the selling of the signing of a personal guarantee for a business which has been miss stated by bankers.
***IBAS investigation will focus on all information and evidence to properly investigate not only the circumstances of the lending but also the circumstances around the taking of all security by the bank.
IBAS has specialized in Director's Bank Personal Guarantee Debt Claim advice help and guidance in UK debt disputes and Director's Personal Guarantee debt claim (or call) validity issues since 1992.
Independent Banking Advisory Service (IBAS) - launched in 1992 as a specialist business banking membership organization assisting bank customers with UK business banking account loan disputes and business banking debt disputes with their bank.