Leaving a company as director with director guarantees.
Discussion
Have just resigned from the company I was a director of (myself and one other director).
There is a company car and also some capital equipment which we had to provide personal guarantees for due to a below average credit score.
What happens now that I am resigning as a director of the company? i.e if the remaining director defaults on payments for one or both items, can the leasing company still come after me personally as I was on the original personal guarantee documentation, or does resigning as a director of the company get me out of any financial liabilities that may arise?
There is a company car and also some capital equipment which we had to provide personal guarantees for due to a below average credit score.
What happens now that I am resigning as a director of the company? i.e if the remaining director defaults on payments for one or both items, can the leasing company still come after me personally as I was on the original personal guarantee documentation, or does resigning as a director of the company get me out of any financial liabilities that may arise?
If you have given a personal guarantee, then that is likely to remain - so you need to either revoke the guarantee in writing to the lender (which might then affect the company), or get the company to release you / indemnify you... depends on the legal agreement you signed...
there are lots of examples out there there of personal guarantors being held liable for someone else defaulting...
there are lots of examples out there there of personal guarantors being held liable for someone else defaulting...
As others have mentioned, the guarantees you have provided have nothing to do with you being or not being a Director so resigning as such will not automatically stop the guarantee. This will need to be arranged separately and with the agreement of the the remaining Directors and creditors.
You are no longer liable for Directorial decisions made from the date of your resignations. However, you remain liable for decisions made whilst you were a Director for (I think) up to five years following resignation.
You are no longer liable for Directorial decisions made from the date of your resignations. However, you remain liable for decisions made whilst you were a Director for (I think) up to five years following resignation.
Maverick007 said:
What happens now that I am resigning as a director of the company? i.e if the remaining director defaults on payments for one or both items, can the leasing company still come after me personally as I was on the original personal guarantee documentation, or does resigning as a director of the company get me out of any financial liabilities that may arise?
Resigning as a director won't affect the personal guarantee (otherwise they would be worthless). The company could be struck off and the guarantee would still be in effect.The guarantee is most likely jointly and severally liable, but you should check. That is you can be chased for all the debt, not just half.
You can most likely only be released from the PG with the permission of both the other director and whomever the PG is with. Even if the other director agrees then the holder of the PG may not, depending upon assets, credit score etc. They don't tend to like to release them, as at the moment they have 2 people to go after, much better than 1!
The company could indemnify you from the debt by agreement but that isn't worth anything if the company is struck off. The other director could indemnify you by agreement, but that would be a piece of paper he could choose to ignore, and you would have to pursue him for it.
A horror story for the OP. Sorry.
A large firm of solicitors in South Yorkshire. Limited Partnership.
Their head-office, the Lease personally guaranteed by the Partners. Various partners left and retired over time.
Bank pulled the overdraft. Firm went down the tubes (well after the recession was over).
Various retired partners now no longer retired and working to pay the rent and rates on the empty head office...
A large firm of solicitors in South Yorkshire. Limited Partnership.
Their head-office, the Lease personally guaranteed by the Partners. Various partners left and retired over time.
Bank pulled the overdraft. Firm went down the tubes (well after the recession was over).
Various retired partners now no longer retired and working to pay the rent and rates on the empty head office...
OP, DO NOT leave your self in a position where you can not control a business which you have PGs for. If you do you are "in effect" accepting whole liable for the remaining debt on the table or putting total faith in the remaining team to deal with it.
I don't know the value, but when I had a load of PGs which added up to 300k, I was definatley in it for the long haul until we cleared it, no matter what personal cost or how disfunctional the team was.
I don't know the value, but when I had a load of PGs which added up to 300k, I was definatley in it for the long haul until we cleared it, no matter what personal cost or how disfunctional the team was.
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