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We at Bell & Company are receiving more and more queries from individuals, concerned or threatened by Personal Guarantees (PG’s) they have given in the past. Typically, PG’s are given to support:
- Banking or other limited company funding including overdrafts, loans, Factoring, HP, leasing etc.
- Limited company trade creditor facilities,
- Peer to Peer loans, and
- Supporting other people’s commitments e.g. underwriting effectively a lease say, if their PG was not deemed to be adequate.
PG’s are given by an individual in good faith with the assumption they will never be called upon. Very often the organisation seeking the PG will suggest that it’s ‘merely paperwork and won’t be called on’. We’ve heard that on many occasions.
However, in today’s disruptive world we regularly see:
- Businesses open to all kinds of threats that can cause trading problems,
- Increasing bad debts,
- The apparent collapse of the High Street,
- Some falling property values,
- Changing financial criteria on existing facilities eg Banking Covenants,
- Loan sales…… to name but a few.
A recent trend sees more and more creditors, even in with a secured asset position, looking to rely on PG’s first and foremost, as they are the ‘lowest hanging fruit’ in terms of ease and speed of recovery of debt.
Sometimes there may be technical issues with a PG, but undoubtedly if a PG is called upon, an aggressive plan of action is required and it is imperative to ensure every option and weakness is considered.
As Debt Strategists, Bell & Company look to answer the questions that will be asked and have a detailed solution before matters escalate.
As with all debt issues, timing and the right engagement are vital. Procrastination will show weakness and legal teams acting for the creditor will ‘smell blood’.
In a recent case a couple’s PG was called upon by their company’s bankers demanding immediate payment of £750,000. They were deemed to be asset rich by their advisors and would not be able to escape the Demand. We for our part:
- Entered into dialogue with and met the Bank,
- Revisited previous submissions provided by way of Asset & Liability Statements that suggested our clients were ‘good for it’, to quote the bank manager,
- With the threat of this action by the Bank, we deemed our clients under duress and valued the assets accordingly demonstrating in the event of Bankruptcy (the elephant in the room the bank manager did not want hear!), the Bank may yield c£300,000 in 3 years’ time after huge costs.
- To cut a long story short – the client re-banked and the issue was settled at £400,000.
This is very niche skill we have honed and this coupled with the proactive strategic approach, has seen us assist many people through PG demands in many forms.
We deal with this and other debt issues each and every day and whilst we would never claim to know everything, we will ensure our clients get the very best chance to solve difficult positions they find themselves in. Our 30+ years of experience helps.
If you have or know anyone who has PG concerns and issues just call us for an informative chat. As ever with debt issues, know the worst and plan for the best reasonable outcome.
Our team are ready for your call on 02895 217373.