Leaving a company as director with director guarantees.

Leaving a company as director with director guarantees.

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Discussion

Maverick007

Original Poster:

128 posts

135 months

Monday 25th September 2017
quotequote all
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?



Eric Mc

121,779 posts

264 months

Monday 25th September 2017
quotequote all
I doubt merely resigning as a director will get you off the hook automatically.

What is happening to the company car for a start? Is it remaining with the company?

If it is being handed to you as part of a settlement, then the finance company will need to be notified I expect.

akirk

5,376 posts

113 months

Monday 25th September 2017
quotequote all
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...

Maverick007

Original Poster:

128 posts

135 months

Monday 2nd October 2017
quotequote all
thanks for the replies guys.


the car is remaining with the company but I will still be liable for it if payments are not met I guess.


if I try and get out of both guarantees, what happens if the loan company don't want the risk of having just the remaining director as a guarantor?


Beetnik

502 posts

183 months

Monday 2nd October 2017
quotequote all
Maverick007 said:
if I try and get out of both guarantees, what happens if the loan company don't want the risk of having just the remaining director as a guarantor?
Simples - they won't release you from the guarantee.

StevieBee

12,795 posts

254 months

Tuesday 3rd October 2017
quotequote all
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.


RM

580 posts

96 months

Tuesday 3rd October 2017
quotequote all
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.



Maverick007

Original Poster:

128 posts

135 months

Thursday 5th October 2017
quotequote all
thanks for the replies


I pretty much thought as much.


annoying, but not much I can do about it I guess.

surveyor

17,768 posts

183 months

Thursday 5th October 2017
quotequote all
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...

Thurbs

2,780 posts

221 months

Thursday 5th October 2017
quotequote all
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.