Bank chasing ex Ltd Co Director for debt?
Discussion
The back story:
My Mrs went into business with a partner.
They were joint directors of the LTD company.
My Mrs left the business 3 years ago, resigned her directorship (or whatever the terminology might be) but her partner carried on the business.
Shortly after leaving the business the only thing my Mrs couldn't do was get her name taken off the banking mandate as she then didn't have any of the banking details of business (no account number, credit card number, or knowledge of recent DD's etc) to prove who she was to the bank - so basically the bank wouldn't talk to her.
In short she has had nothing to do with the business for the last 3 years.
Last week we heard that the her ex-partner has sold the business.
Today my Mrs has had a call from the bank that the business has a £600 debt and they're chasing it up.
My Mrs explained all the above, the bank checked with companies house and confirmed that my Mrs isn't a director - but once again the bank can't take her of the mandate because My Mrs can't give any details of/about the account.
My question:
Can the bank chase my Mrs for this debt?
My Mrs went into business with a partner.
They were joint directors of the LTD company.
My Mrs left the business 3 years ago, resigned her directorship (or whatever the terminology might be) but her partner carried on the business.
Shortly after leaving the business the only thing my Mrs couldn't do was get her name taken off the banking mandate as she then didn't have any of the banking details of business (no account number, credit card number, or knowledge of recent DD's etc) to prove who she was to the bank - so basically the bank wouldn't talk to her.
In short she has had nothing to do with the business for the last 3 years.
Last week we heard that the her ex-partner has sold the business.
Today my Mrs has had a call from the bank that the business has a £600 debt and they're chasing it up.
My Mrs explained all the above, the bank checked with companies house and confirmed that my Mrs isn't a director - but once again the bank can't take her of the mandate because My Mrs can't give any details of/about the account.
My question:
Can the bank chase my Mrs for this debt?
Normally a bank will only lend to a Ltd Co if it has a personal guarantee - if you wife signed a personal guarantee then yes she is liable - unless she told the bank at the time and they discharged that guarantee why would they NOT chase her for the debt ? It's not up to the lender to constantly check with the guarantor if they still want to be liable for someone else's debt. They will want to protect their position for as long as possible.
Ziplobb said:
Normally a bank will only lend to a Ltd Co if it has a personal guarantee - if you wife signed a personal guarantee then yes she is liable - unless she told the bank at the time and they discharged that guarantee why would they NOT chase her for the debt ? It's not up to the lender to constantly check with the guarantor if they still want to be liable for someone else's debt. They will want to protect their position for as long as possible.
This.Unless she has signed a PG then the bank have zero comeback.
Squiggs said:
Shortly after leaving the business the only thing my Mrs couldn't do was get her name taken off the banking mandate as she then didn't have any of the banking details of business (no account number, credit card number, or knowledge of recent DD's etc) to prove who she was to the bank - so basically the bank wouldn't talk to her.
To be a signatory in the first place she must have known the details (account number/sort code/account name) so how come she didn't 'shortly after' resigning her directorship? The prudent course would have been to get herself removed from the mandate first. It never ceases to amaze me how many people go into business without seeming to understand the basics.Similar threads:
https://www.pistonheads.com/gassing/topic.asp?t=13...
http://www.ukbusinessforums.co.uk/threads/how-can-...
She was never a PG.
Having relieved herself of anything to do with the accounts and any/all of the business bank details, cutting up her credit cards, etc, etc, and informing company house, etc, etc. her only oversight was getting removed from the banking mandate.
Once this error was realised she couldn't get through the banks security checks to remove herself as she no-longer had any info relating to the account.
Can the bank chase her for the debt?
Additional info:
The bank never lent to the business, her, (nor her business partner as far as we are aware).
We can only conclude the debt is for unpaid DD's at the close of the ex-partners business.
Having relieved herself of anything to do with the accounts and any/all of the business bank details, cutting up her credit cards, etc, etc, and informing company house, etc, etc. her only oversight was getting removed from the banking mandate.
Once this error was realised she couldn't get through the banks security checks to remove herself as she no-longer had any info relating to the account.
Can the bank chase her for the debt?
Additional info:
The bank never lent to the business, her, (nor her business partner as far as we are aware).
We can only conclude the debt is for unpaid DD's at the close of the ex-partners business.
Edited by Squiggs on Friday 8th December 22:46
Squiggs said:
She was never a PG.
Is she absolutely 100% positive about that?Squiggs said:
Having relieved herself of anything to do with the accounts and any/all of the business bank details, cutting up her credit cards, etc, etc, and informing company house, etc, etc. her only oversight was getting removed from the banking mandate.
Hmm. That sounds like quite a long way from "relieving herself of anything to do with..." the business's banking.Squiggs said:
Can the bank chase her for the debt?
If it comes within a PG she signed, absolutely. All the way to court, where they'll win.Squiggs said:
Additional info:
The bank never lent to the business, her, (nor her business partner as far as we are aware).
We can only conclude the debt is for unpaid DD's at the close of the ex-partners business.
A separate business to this one? Nope.The bank never lent to the business, her, (nor her business partner as far as we are aware).
We can only conclude the debt is for unpaid DD's at the close of the ex-partners business.
eatcustard said:
Her x business partner sold the business
One would assume if done properly the sale contract would include who was held liable for any outstanding business liabilities. Unless she signed a PG the bank has no legal recourse against a Director for debts incurred by a limited company which is classed as a seperate legal entity unless it can be proven the Directors had acted unlawfully in some way.
The debt remains against the business therefore any legal action should be pursued against the limited company, and a petition to wind up if the business is insolvent.
Signing a mandate is only to give agency control of banking as an authorised signatory of the company - if she had a PG she would know as it would have to be sworn un front of a solicitor as she wuld be required to have independent legal advice to acknowledge the removal of limitation of liability.
I suspect she is confused as the bak has likely written to all directirs on the mandate advising them of the sum owed, it is not a request for personal payment but payment from the company. She should write back and inform them of the date her duties as a director where formally discharged and refer the to contact the current director(s) as the debt stays with the company regardless of ownership until such time as the company is wound up.
in order to exercise a claim against a PG they would first need to attempt to recover the debt from the company with a high court writ and bailiff action to recover funds or assets, or issue for insolvecy. Any remaning debt outstanding subject to a PG can be then pursued.
Simply remaining active on a mandate does not create a liability to pay, howeer in the absence of security credentials she should send a copy of her director resgnation status and send it to the banks information officer and request to be removed from the mandate which they are obliged to d as she no longer has legal authority to carry out fidicuary duties on behalf of the company.
nyxster said:
in order to exercise a claim against a PG they would first need to attempt to recover the debt from the company with a high court writ and bailiff action to recover funds or assets, or issue for insolvecy. Any remaning debt outstanding subject to a PG can be then pursued.
Wrong.PS: High Court Writs died out over a decade ago.
PPS: £600 is below the insolvency threshold.
My Mrs wasn't a PG 100%!
She sold her half of the Ltd company business to her business partner 2 years ago.
She forgot, and then couldn't get herself off the banking mandate.
Her now ex business partner has within the last few weeks sold the business.
The bank called my Mrs saying that the account is £600 in the red.
Mrs explained that she is no longer a director (bank confirmed this by looking on companies house website).
So it sounds though she has nothing to worry about
Thanks everyone for the advice.
The weird thing was that during the conversation with the Bank they let my Mrs give authorisation to cancel any further DD's from the account ???
Presumably this was error by the bank as they had been told and confirmed she was no longer a director (but then again she's still on the mandate?)
Personally I don't think she should have given the bank any authorisation - but hey-ho.
She sold her half of the Ltd company business to her business partner 2 years ago.
She forgot, and then couldn't get herself off the banking mandate.
Her now ex business partner has within the last few weeks sold the business.
The bank called my Mrs saying that the account is £600 in the red.
Mrs explained that she is no longer a director (bank confirmed this by looking on companies house website).
So it sounds though she has nothing to worry about
Thanks everyone for the advice.
The weird thing was that during the conversation with the Bank they let my Mrs give authorisation to cancel any further DD's from the account ???
Presumably this was error by the bank as they had been told and confirmed she was no longer a director (but then again she's still on the mandate?)
Personally I don't think she should have given the bank any authorisation - but hey-ho.
Breadvan72 said:
nyxster said:
in order to exercise a claim against a PG they would first need to attempt to recover the debt from the company with a high court writ and bailiff action to recover funds or assets, or issue for insolvecy. Any remaning debt outstanding subject to a PG can be then pursued.
Wrong.PS: High Court Writs died out over a decade ago.
You don't need to be a Director to be on the bank mandate.
Given the conversation it was a surprise they took instruction - but she is still on the mandate
And although understandable, she was unwise to become involved again.
Given the conversation it was a surprise they took instruction - but she is still on the mandate
And although understandable, she was unwise to become involved again.
Squiggs said:
The weird thing was that during the conversation with the Bank they let my Mrs give authorisation to cancel any further DD's from the account ???
Presumably this was error by the bank as they had been told and confirmed she was no longer a director (but then again she's still on the mandate?)
Personally I don't think she should have given the bank any authorisation - but hey-ho.
Presumably this was error by the bank as they had been told and confirmed she was no longer a director (but then again she's still on the mandate?)
Personally I don't think she should have given the bank any authorisation - but hey-ho.
Boosted LS1 said:
Breadvan72 said:
nyxster said:
in order to exercise a claim against a PG they would first need to attempt to recover the debt from the company with a high court writ and bailiff action to recover funds or assets, or issue for insolvecy. Any remaning debt outstanding subject to a PG can be then pursued.
Wrong.PS: High Court Writs died out over a decade ago.
BertBert said:
You don't need to be a Director to be on the bank mandate.
Given the conversation it was a surprise they took instruction - but she is still on the mandate
And although understandable, she was unwise to become involved again.
True, but having signing authority doesn't necessarily make someone liable to the bank for the debts of the account holder. An account holder can give signing authority to anyone they like.Given the conversation it was a surprise they took instruction - but she is still on the mandate
And although understandable, she was unwise to become involved again.
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