Estate liable for business loan advise
Discussion
Hi all,
Looking for some advise, not going to hide behind a false account or anything.
My dad was a company director and during this period was garantor for a number of business loans, 1 of which is still outstanding. My dad passed away over a year ago and the estate was left to my mum with the exception of 2x watches which were left to me and my sister. My mum is registered disabled so doesn't work.
The directorship was taken over by my uncle over a year ago and the business kept on trading up until March 2019 where they have closed the doors.
Mum and sister have returned home from Scotland late last night, it was the anniversary of dads death earlier in the week so they have been up to Scotalnd to spend time with a family friend. I get a message at 2300 to say the bank (not sure which bank) have written to mum and advised that she is now liable (well the estate) for the business loan. Obviously both sister and mum have gone into panic. The bank started adding interest as of the 9th of April as well to make it worse.
Mum and sister live in the family home which parents built when I was a baby, There is a small amount outstanding on the mortgage that mum was planning to pay off, she has also been thinking about selling up and moving down south where I live possibly next year or the year after.
Question is, is there ever anyway to fight this or appeal it? or is it a simple case of, thats that pay up? The house valuation they had earlier in the year would allow her to sell up, pay off the loan and still have plenty left over for a smaller property down south but I'd rather avoid doing that as never wanted to push her into selling up until she told us she wanted to.
I have no experience of this kind of thing, I also have no information into the loan as I wasn't involved in the business at all. I have told them to speak to the solicitor on monday but is that just waisting more money if theres nothing that can be done.
Thanks
Looking for some advise, not going to hide behind a false account or anything.
My dad was a company director and during this period was garantor for a number of business loans, 1 of which is still outstanding. My dad passed away over a year ago and the estate was left to my mum with the exception of 2x watches which were left to me and my sister. My mum is registered disabled so doesn't work.
The directorship was taken over by my uncle over a year ago and the business kept on trading up until March 2019 where they have closed the doors.
Mum and sister have returned home from Scotland late last night, it was the anniversary of dads death earlier in the week so they have been up to Scotalnd to spend time with a family friend. I get a message at 2300 to say the bank (not sure which bank) have written to mum and advised that she is now liable (well the estate) for the business loan. Obviously both sister and mum have gone into panic. The bank started adding interest as of the 9th of April as well to make it worse.
Mum and sister live in the family home which parents built when I was a baby, There is a small amount outstanding on the mortgage that mum was planning to pay off, she has also been thinking about selling up and moving down south where I live possibly next year or the year after.
Question is, is there ever anyway to fight this or appeal it? or is it a simple case of, thats that pay up? The house valuation they had earlier in the year would allow her to sell up, pay off the loan and still have plenty left over for a smaller property down south but I'd rather avoid doing that as never wanted to push her into selling up until she told us she wanted to.
I have no experience of this kind of thing, I also have no information into the loan as I wasn't involved in the business at all. I have told them to speak to the solicitor on monday but is that just waisting more money if theres nothing that can be done.
Thanks
If he was the Guarantor for the loan then yes, his estate is liable for the debt if the Ltd did not repay it. Were there any assets in the Ltd when it was wound up? If so, what happened to them and in what priority were creditors paid?
Edited by Squiddly Diddly on Saturday 13th April 10:06
Might your dad have taken out any insurance - either on his then business or specifically against these (and this) loans?
Why has it defaulted? I appreciate you might not want to go into detail, but is there any recourse open to you to pursue the original loan applicant?
It sounds a stressy situation.
Why has it defaulted? I appreciate you might not want to go into detail, but is there any recourse open to you to pursue the original loan applicant?
It sounds a stressy situation.
It sounds like your Uncle wound up the business without paying off all the loans? Did he formally go bankrupt, or just effectively close the doors and walk away?
I don’t think your mum or your dad’s estate could be held liable ad infinitum for loans your dad agreed to act as a Guarantor for. It seems wrong in principle and also difficult to enforce in practice.
I don’t think your mum or your dad’s estate could be held liable ad infinitum for loans your dad agreed to act as a Guarantor for. It seems wrong in principle and also difficult to enforce in practice.
The business since dad stepping down has taken a turn for the worse, it was a taxi company in a smallish town. Older drivers retring and the wages not enough to bring in new drivers, combined with there being numerous other companies in the area, cost of repairing older cars or buying new, Uncle decided to close doors. The company was LTD.
I however am not sure what has happend since, presume the assets (cars mainly) have been sold but they would come no where near the loan amount (not sure of the exact amount). Staff were paid up until closing the doors and have all since moved on.
I however am not sure what has happend since, presume the assets (cars mainly) have been sold but they would come no where near the loan amount (not sure of the exact amount). Staff were paid up until closing the doors and have all since moved on.
NDA said:
Might your dad have taken out any insurance - either on his then business or specifically against these (and this) loans?
Why has it defaulted? I appreciate you might not want to go into detail, but is there any recourse open to you to pursue the original loan applicant?
It sounds a stressy situation.
Doubt he took out insurance against this, will have to check but doubt it. Why has it defaulted? I appreciate you might not want to go into detail, but is there any recourse open to you to pursue the original loan applicant?
It sounds a stressy situation.
Uncle has closed the doors so obviousy bank havent had a payment so have now chased gurantoor for it.
AJB88 said:
The business since dad stepping down has taken a turn for the worse, it was a taxi company in a smallish town. Older drivers retring and the wages not enough to bring in new drivers, combined with there being numerous other companies in the area, cost of repairing older cars or buying new, Uncle decided to close doors. The company was LTD.
I however am not sure what has happend since, presume the assets (cars mainly) have been sold but they would come no where near the loan amount (not sure of the exact amount). Staff were paid up until closing the doors and have all since moved on.
Providing the assets were used correctly, ie paying off creditors without preference (unless they had it), I fear your dad's estate is liable.I however am not sure what has happend since, presume the assets (cars mainly) have been sold but they would come no where near the loan amount (not sure of the exact amount). Staff were paid up until closing the doors and have all since moved on.
Are there any documents on Companies House about the winding up?
Was there any probate, or executors? Was there any estate left by your dad, i.e. assets in his own name?
If it was money in joint accounts, and the house in joint ownership, then this is automatically your mums, so not part of his estate, and therefore not payable to any of his debt.
If it was money in joint accounts, and the house in joint ownership, then this is automatically your mums, so not part of his estate, and therefore not payable to any of his debt.
One thing to check - was the loan under the EFG scheme (Enterprise Finance Guarantee)? This was a scheme to get banks lending after 2009 and loans were underwritten (75%) by the government / DTI (or whatever they are called these days!).
Either way get a copy of the original loan agreement.
Either way get a copy of the original loan agreement.
Given he died some time ago I would assume the estate has been wound up ?
If the executor has acted honestly and there were no papers referring to the guarantee and all funds have been distributed I wonder what happens next? The executor has acted in good faith. The money has gone. The bank did not get in contact.
If there is a claim and it is successful then bear in mind the value of the estate will reduce for iht purposes ( if the estate was worth more than the limit ).
Edit. Uncle google https://m.thegazette.co.uk/wills-and-probate/conte...
It seems that if a notice was not published then the executor can be liable and in any event the beneficiaries are - which is surprising.
If the executor has acted honestly and there were no papers referring to the guarantee and all funds have been distributed I wonder what happens next? The executor has acted in good faith. The money has gone. The bank did not get in contact.
If there is a claim and it is successful then bear in mind the value of the estate will reduce for iht purposes ( if the estate was worth more than the limit ).
Edit. Uncle google https://m.thegazette.co.uk/wills-and-probate/conte...
It seems that if a notice was not published then the executor can be liable and in any event the beneficiaries are - which is surprising.
Edited by Jeremy-75qq8 on Tuesday 16th April 21:43
Mum attended a meeting yesterday of shareholders of the company where she has made the banks letter public knowledge to the people in the meeting, accountant has put her in contact with a solicitor who deals with these kind of things (funnily enough its the solicitor who did mum and dads wills a few years ago). The company is still in the winding down stages at the moment, I'm not fully aware of many of the details but would imagine the bank has first dibs on assets such as cars (taxi company).
The worst thing is the letter is from Barclays (I didn't know the lender at the time of posting), Barclays are the main bank mum & dad have banked with all their lives, the letter is addressed to MY DAD, Barclays are fully aware when he passed away as we literally went in branch the day he passed with the death certificates, they moved all the joint accounts into my mums sole name etc and also changed any business accounts into my uncles name. So that was a real s
t move on their part, they have been apologetic on the phone so far apparently but still.
Mums organised a meeting with solicitor on Tuesday next week so will know more then.
The worst thing is the letter is from Barclays (I didn't know the lender at the time of posting), Barclays are the main bank mum & dad have banked with all their lives, the letter is addressed to MY DAD, Barclays are fully aware when he passed away as we literally went in branch the day he passed with the death certificates, they moved all the joint accounts into my mums sole name etc and also changed any business accounts into my uncles name. So that was a real s
t move on their part, they have been apologetic on the phone so far apparently but still. Mums organised a meeting with solicitor on Tuesday next week so will know more then.
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