Company Law Forum - Explaining Companies Act 2006 - After resigning as Co.Dir, how do I extracate myself from personal Guarantee on Co.Overdraft

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After resigning as Co.Dir, how do I extracate myself from personal Guarantee on Co.Overdraft

Written by paul fowkes

Thursday, 25 June 2009

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Comments (4)

1. Written by maurice, on 18-08-2009 17:56
oops! There is no easy answer. You dont need to be a director to be bound by a guarantee. The only way out is to give the bank notice that your guarantee is withdrawn with effect from some future date. They will normally withdraw the facility (and may grant a new one) thus ending your involvement. It means that your liability is stopped but at what level is a matter of speculation. You may consider that the certainty is better than uncertainty even if expensive.

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2. Written by SM!, on 03-08-2009 21:50
i am also in a similar position to Swain Blue, but the only difference being that i resigned as co director and the company still continued to trade and use up the overdraft. I am now in a position where several months later the company is experiencing financial difficulty and the bank has called in the personal guarantee and are chasing me for the amount,

The current directors have agreed to take on the PG liability away from me and i was wondering whether anyone was aware of any standard agreement that can be put in place between the new directors and myself which can be signed and sent off to the bank.... and then hopefully get them off my back!

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3. Written by ndhart, on 13-07-2009 10:31
This is very complex, and the quick answer is that you are at the mercy of the bank.

For example, if the bank knew that those signing the guarantees only did so if all did, then it could be argued that, until the last gtee is in place, none of them are binding. The difficulty is that talking to the bank about this might make the bank freeze the account, which will precipitate the closure of the business and make the phoenix operation more reasonable.

Alternatively you can unilteerally withdraw your guarantee if the facility is not being used (although there is normally a 3 month cooling off period).

Remember though that there is goodwill attached to the current business, and the drectors have obligations to ensure the old company gets paid full value for the goodwill if they start the phoenix operation. It might just be worth telling them how much you would insist the liquidator charged them for that goodwill, making the phoenix operation a more expensive bet than sorting out the existing business.

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4. Written by swain blue, on 25-06-2009 19:01
I recently resigned as CoDir after a bitter personal dispute with other director. The previous week, I had signed ( along with other 2 directors ) a personal guarantee for 25K od. This was to be followed up by a further 20K guaranteed by other director bring total od to 45K. The further od never happened. Instead I've heard the other directors are thinking of liquidating existing co and phoenxing work to new company with no debt and new od arrangements. Can I get my name off the guarantee before this happens? HELP

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