This is something you do not want to find out the hard way. Once a Personal Guarantee is signed most banks will not remove it. This is because they tend to be ‘all monies’ guarantees for present and future debt owed to the bank. There is more information on ‘all monies’ guarantees in another of our articles in the knowledge hub.
Personal Guarantees UK deals with many directors who signed a Personal Guarantee many years ago for a facility which has been repaid only to find that this same Personal Guarantee then covers the bank for any further monies owed to it once the company enters insolvency.
Something we see only too often is former Directors of a company who have left the company even many years prior receiving demand letters out of the blue because they did not ensure at the time of leaving that all Personal Guarantees they were liable for were removed or frozen.
Many at the point of leaving may have done so with the current liability settled with the bank only then to find at some point later the remaining Directors have taken new business loans or credit and they are still personally liable for them under the previously signed guarantee. A Director when leaving a company where a Personal Guarantee has been signed needs to take actions to protect themselves at that point. This involves getting an agreement from the bank that their Personal Guarantee is frozen at the current value of any liability still outstanding. We cannot stress anymore strongly how important that is. Once the company enters Insolvency and a demand is made of you it is too late to do anything but negotiate dependant on your financial circumstances which can have a significant and potentially devastating impact on your personal finances and assets.
Swift engagement with the creditor is vital and will achieve the best result for you. Many former directors spend thousands of pounds trying to unsuccessfully challenge the demand legally before engaging us to act on their behalf. We will of course confirm the validity of the Personal Guarantee, but it is very rare that they are not valid and usually the best course of action is to analyse your current financial position and to put a commercially sensible and acceptable offer forward to the creditor in order to finalise the matter.
If you find yourself the subject of a Personal Guarantee demand for any reason including the above then please get in touch 0333 8801791 / firstname.lastname@example.org or fill in the contact form on our website and we will call you back.