Personal Guarantees - Nicholson Gordon Law

Personal Guarantees

Are you concerned about a personal guarantee which you have given to a bank, landlord or other creditor?  We can help.

A personal guarantee is an agreement to be held responsible for paying the debts of another person or business.  If you are a business owner and/or are a director of a limited company, you may have signed a personal guarantee when you first started your business, signed a lease, or took out a loan.  In the current economic climate, our enquiries in this area are increasing, as many banks are calling in business loans and when the company is unable to pay, the bank will seek to recover the money by pursuing the directors under personal guarantees.

Are you being pursued for money under a personal guarantee and need advice on issues such as:

  • Do I have to pay the money demanded or are there other options available?
  • If I am legally bound by the guarantee, can I negotiate with the bank or other creditor to accept a lower amount than has been demanded?
  • Can I really lose my home or other assets or be made bankrupt as a result of signing the personal guarantee?
  • Are my business partners or other directors equally liable?

We have been able to help a number of clients in relation to these issues, for instance Mr W of Burbage was being pursued by a finance company for £70,000 in relation to a personal guarantee he had provided related to a Limited Company’s debts. The guarantee was secured upon our client’s property by way of a legal charge. He had previously been advised by another national firm of solicitors that he had no defence to the claim. Our advice to our client was that he had a good technical defence to the claim, and eventually the finance Company accepted the token sum of £300 in full and final settlement to include the release of the charge over the property.

It is often possible to challenge the validity of a personal guarantee or limit your liability under it. However, these cases are rarely straight forward and early advice from a specialist solicitor is highly recommended.

Learn more about the representation we offer by contacting us online or ring 01664 431 300 to arrange your initial consultation.

We represented Mr T G of Leicestershire in a claim brought by a bank against him relating to a number of personal guarantees in place at the time that his Company had gone into liquidation. We raised technical arguments relating to the validity of the personal guarantee and eventually a full and final settlement was reached in a sum that was only in the region of 20% of the sum claimed.

Mr W of Burbage was being very aggressively pursued by a finance company claiming the sum of £70,000 in relation to a personal guarantee he had provided related to a Limited Company’s debts. The guarantee was secured upon our client’s property by way of a legal charge. He had previously been advised by another national firm of solicitors that he had no defence to the claim, and should pay the claim. Our advice to our client was that he had a very good technical defence to the claim, that the previous solicitors were incorrect and that we should put forward a robust defence. Eventually the finance Company accepted the token sum of £300 in full and final settlement. Naturally our client was delighted having faced the loss of his family home.