Archive for September, 2016

Savings of £4.97M

Settlement at c0.6% of original borrowing

-A settlement of a Co Down based Client, working in the Freight Industry, attended, for the purposes of consultation, at our offices and was extremely distressed at the thought that he would be made Bankrupt by his primary Creditor who was a well-known and aggressive vulture fund.

-He owed more than £5,000,000.00, after the sale of all security had been worked through, and had minimal funds with which to address his debt.

-In the event of his personal Bankruptcy, same individual would have lost his license allowing him to trade in his area of expertise, preventing him from providing any sort of income for his young family so this was an avenue he strongly wished to avoid.

-He simply did not know where to turn or what to do and, after a positive and reassuring meeting which instilled him with the utmost confidence, he promptly instructed Bell & Company.

-Within 3 months & further to in-depth, persistent & aggressive negotiations conducted by our professional team, we had settled the debt, on a full & final basis, with a sum of £30,000.00 provided by family and friends.

-We successfully assisted our Client in avoiding Bankruptcy, starting a fresh and achieved savings in the region of £4,970,000.00.

-Our Client was no longer subject to any further pursuit and could start again, concentrating on what was important to him and his family.

I am a company director of a limited company with personal Guarantee. How will this effect me?

I am a company director of a limited company with personal Guarantee. How will this effect me? More often than not where a Lender is offering loan facilities to a Company, they will, by way of security, require a Personal Guarantee to be offered by the Director(s) of same Company. This will essentially provide the Lender with the reassurance that, even in the event of the Company becoming insolvent, they can pursue the Directors directly and personally in relation to monies owing. It provides them with an extra layer of cover so to speak…

Directors (especially in the past) will have seen this as a risk worth taking, particularly as it could massively influence the Lender’s decision as to whether to approve/deny a loan application submitted on behalf of the Company. This is all very well when the Company is performing however where a Company begins to experience financial issues/is showing signs of being in a position of financial distress, Personal Guarantees can have serious and hard hitting consequences for the obligated Director(s).

In some instances, Personal Guarantees will be capped at a specific amount and the amount will have been influenced by the overall, net worth of the Director(s) at that time. In other instances however, Guarantees will be somewhat open ended and will be as wide as to cover all debts owing by the Company to the subject lender. Negotiating in relation to a Personal Guarantee is most definitely possible, when broached in the correct way and with the right presentation, however is not straightforward.

The subject lender will analyse the position in an in-depth manner and conduct a high level of due diligence, often engaging specialist professionals, in order to determine what can be recovered thus it is imperative that positioning and approach is concise and watertight. Creditors will look at various aspects of the Director(s) position, not least, to include asset/monetary position and a number of documents, reports and evidence will be required to be submitted in order to support any submissions made. There are central in the context of negotiations.

Once again, the importance of obtaining the correct advices with regards how to communicate/approach must be stressed here as this can very often mean the difference between losing and retaining livelihood/home etc. The importance of being pro-active cannot be emphasised enough as failure to do so will often result in Judgment/Statutory Demand, both of which can be avoided when the correct steps are taken.

To conclude, we would state as follows:

Whilst Personal Guarantees do not very often impact/feature in the thought process of Directors at the time of loan application and where the Company is performing, other than to be considered the determining factor re sanctioning/rejection, they can have serious, personal consequences where the Company becomes insolvent and the debt is called in. The Lender is entitled to explore all surrounding property, the equity therein and the financial well-being of the individual and can pursue up to and including Bankruptcy in which event there is often a lot at risk.

This can be avoided in its entirety if the correct line of communications are adopted from the outset and with the right advice, guidance and representation. There are significant savings to be achieved if handled in the correct way – We have achieved savings at 0.6% of overall debt owing however each case will be circumstance dependent. Why take the risk caused by delay…?

Act now and protect what is important.

My home has been sold and now I have received a letter chasing an outstanding balance. What are my options?

As the various lending institutions work through their ‘delinquent’ mortgage books, more and more people are approaching us at the end of the sale process, when the lender and their agents, usually solicitors, chase and seek recovery of the outstanding amount due, after the disposal of the asset(s) involved.

If a property was purchased pre property crash, then inevitably there will be a significant price variation after a sale based on today’s property values. Negative Equity is an extremely prevalent issue in today’s property climate in Northern Ireland and across the UK.

Invariably this balance will be a lot higher than you thought but will include the following additional information:

1.       All the interest since the last payment made.

2.       The property would have been sold ‘In Repossession’. Recent DSD figures show that these properties yield as little as 59% of the market value.

3.       Costs of the necessary action to recover the property through court.

4.       Any other associated costs

 

The balance left after the sale, I.e. ‘The shortfall’ is relative and the route which is taken is dependent upon two key factors

1.       Do you have significant surplus income? And/or

2.       Do you own other assets?

 

Inevitably, the balance is irrelevant. If a client cannot afford to pay a £70,000 shortfall, then they most certainly will not be able to afford a £100,000 shortfall.

Therefore, If the answer is no to both of the above questions then the options open to you firstly and the lender secondly are:

1.       A choice of formal insolvency, be it bankruptcy or IVA, subject to your individual circumstances.

2.       An informal insolvency option to settle with the lender on a full and final basis for a reduced amount.  

 

As ever we would implore you to be proactive as these things will not just go away.  By this stage the lender and their advisors usually want the matter resolved, one way or another, as does the client. 

Bell & Company have developed a specialised team who work with a wide variety of lenders and situations and resolve issues like these on a daily basis with excellent success.  If you find yourself with any of these issues, please get in touch with us here at Bell & Company. To discuss your case with us please call Karen on 02895 217373 to arrange your free initial consultation at a time and place to suit you. We look forward to assisting you.

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