Personal Guarantees by Directors

If you have given one of your creditors a personal guarantee, it is important to know that you cannot just simply get out of them with no consequence. They carry a legal responsibility and the only way to remove such a personal guarantee is by:

  • Negotiating with the lender for them to remove it
  • Negotiating on payment terms
  • Paying off the personal guarantee, or
  • Going bankrupt

In order to ensure that you have the best possible guidance on protecting yourself legally and financially, it is vital to seek the support of an expert insolvency practitioner. Here at The Insolvency Experts, we offer a wealth of experience in such matters, with our team available for contact today by phone or email.

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3 Key Questions on personal guarantees by directors

What are the main uses of a personal guarantee?

Many lenders (and perhaps some suppliers) may ask for a personal guarantee from you as a director of the company. This means that if the company defaults on the terms of the agreement they can chase you personally for the debt.

If you have signed a personal guarantee, you should seek advice from an Insolvency Practitioner, who may also seek the opinion of a solicitor regarding the terms of the contract to know exactly what your legal options are.

If the company defaults on a debt and the personal guarantee is called upon, then the steps the creditor may take depend on the amount of the debt.
 

What are the main penalties related to personal guarantees and bankruptcy?

Understandably, many of our clients are highly concerned by the possible penalties related to unpaid personal guarantees by directors. The most common courses of action in this area are:

  • Firstly, they will issue you with a statutory demand – allowing you 21 days to settle the debt, after this time they will then start bankruptcy proceedings against you (if the debt is over £5,000).
  • After this 21 day period, they can then apply for a County Court Judgement against you – more on our CCJs page.

If a personal guarantee is called upon, we suggest ensuring that the validity of the contract is questioned, and that it has been executed correctly.It’s then important to discuss the debt with the creditor, to begin discussing terms of repayment – they want to ensure you pay the debt, therefore it’s in their interest as well as yours to settle debt.
 

How do I find the right guidance on personal guarantees by directors?

Personal guarantees are extremely complex areas – seeking professional advice before signing them is highly recommended. Contact us here at The Insolvency Experts for more information about the duties of a director by calling us on 0300 303 8284 or emailing us on enquiries@theinsolvencyexperts.co.uk.

How we’ve helped others through
rescuing their business

At the Insolvency Experts our sole aim is to rescue, recover and renew businesses that are in difficulty. We are specialists in corporate turnaround and help business overcome cash flow difficulties and other financial problems. Our experts:

  • Help you to take the appropriate steps to meet any impending deadlines
  • Have a long track record in helping companies in similar positions
  • Can help you take the best course of action, often using your assets to help you avoid additional cost

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We helped a struggling Birmingham restaurant from going into administation:

  • Turnover £890K
  • Total Creditors £94K
  • Assets £340K
  • HMRC Overdue £20K
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We helped a marketing agency from going into administation:

  • Turnover £700K
  • Total Creditors £120K
  • Assets £20K
  • HMRC Overdue £30K
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Why Choose Us?

We understand you have already made every effort to avoid insolvency and day to day life is stressful at the moment. We can start immediately and quickly work with you through the process.

We see many examples of great businesses that have fallen on hard times or suffered through no fault of their own.

We understand that the company directors and shareholders have already tried valiantly to carry on trading, but circumstances dictate that this is no longer possible.

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