Thursday 23 May 2013 at 10:35 am
We are delighted to announce that one of our senior client managers, Wendy Guild, an experienced marathon and half marathon runner, will be participating in the Great North Run on 15th September this year.
Wendy has chosen to run for St Mungo's - a charity supporting homeless people with accommodation mainly in London and the south.
This is very close to our hearts as the cost and consequences of repossessions of people homes both for those families and our society as a whole (economic, emotional and social) are devastating.
St Mungo's is a 40 year old organisation, offering the most comprehensive range of services to homeless men and women in the UK. To read more about St Mungo's you can visit our charity page on the website here
If you would like to show your support and sponsor Wendy - you can do so by clicking on her Just Giving page here
Tuesday 07 May 2013 at 12:06 pm
Having liquidated my company in July 2012 and thinking that all bases were covered, I was shocked to receive a demand for £5500 for a company debt that I had, supposedly, signed a personal guarantee for as a Director. Having already spoken to Mel regarding other matters in the liquidation, I immediately contacted him and placed the matter into his and Wendy's capable hands. After negotiation, they managed to reduce the amount to £1700, I would highly recommend Personal Guarantee for their helpful and professional approach, they instantly make you feel like they are in control of the situation and keep you well informed every step of the way. Thank you for making a difficult situation so much easier to handle!
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Tuesday 23 April 2013 at 6:13 pm
Please find below an interesting review by solicitors Bermans who act on behalf of invoice finance companies.
It appears to give quite a balanced view as to the opportunities and threats and will prove useful in dealing with invoice finance personal guarantees going forward.
There are further developments in this area and we will keep you posted on these in the next few weeks.
"We were recently involved in a difficult piece of litigation which raises a danger warning for discretionary termination fees. The relevant clause in the Invoice Finance Agreement provided "Upon or at any time after any Termination Event we shall be entitled to at our discretion make an additional charge equivalent to 10% of the Gross Invoice Value of all Debts then Outstanding to cover our additional costs."
The Financier duly levied this 10% charge without any great scientific enquiry, at least that could be substantiated by a paper trail, and the guarantor of the disgruntled client launched proceedings seeking a declaration that this was unlawful.
We challenged this on the usual ground that termination fees cannot constitute a penalty under well-established legal principles that restrict the law on penalties to charges arising as a result of a breach of contract, whereas the Termination Event often relied upon by the Financier was the client's insolvency.
The guarantor's lawyers came back with an argument we had not seen before, to the effect that because the relevant clause conferred a discretion on the Financier, and expressly referred to the purpose of the charge being "to cover...additional costs", the Financier's room for manoeuvre was limited, and relied on case law to the effect that a contractual power of discretion must not be exercised "arbitrarily, capriciously or unreasonably".
We countered this argument with a later authority, the decision of the Court of Appeal in Socimer International Bank Ltd v Standard Bank of London Ltd  EWCA Civ 116, in which the principle contended for had been restricted by Rix LJ as follows: -
"...a decision-maker's discretion will be limited, as a matter of necessary implication, by concepts of honesty, good faith, and genuineness, and the need for the absence of arbitrariness, capriciousness, perversity and irrationality. The concern is that the discretion should not be abused".
There is of course an enormous difference between unreasonableness on the one hand and irrationality on the other hand, and this later authority confirmed our contention that it is not sufficient for a client to simply allege that the Financier's decision to apply the discretionary charge is unreasonable: it must actually be shown to be the subject of arbitrariness, capriciousness, perversity or irrationality before it can successfully be challenged.
There was nevertheless an area of risk in our case partly because there was no clear paper trail explaining the decision to charge the maximum 10% allowed by the discretionary clause, and the matter was settled in order to avoid the risk of a precedent which could have been highly damaging to the invoice finance industry.
Everything depends on the terms of the Invoice Finance Agreement as a whole, and in particular the scheme of the various termination and charging provisions and their interplay. From a drafting perspective it is arguable that the Financier is in a stronger position in levying these sorts of charges upon a termination event if it has an absolute entitlement to do so and there is no reference either to a discretionary power or use of words such as "up to" a specific percentage, which can itself be construed as involving the exercise of a discretion.
Also, from a drafting perspective there is an argument for carefully considering the removal of any reference to the specific purpose of the charge, such as "to cover our additional costs", because again this opens up room for argument as to whether the charge can be justified in the light of the stated purpose. On the case law we had to concede that in approaching the proper construction of the clause the court had to have regard to the stated purpose of the charge, but we argued that this did not require a scientific justification of the amount charged.
A common drafting device is to include an express acknowledgment by the client to the effect that the proposed charge is considered "a reasonable estimate of costs" incurred in collections after a termination event, but the case law as to the binding effect of such a declaration is not decisive.
Of course to the extent that clients or their lawyers consider these matters in the pre-take on negotiating process an absolute power to charge without any reference to a purpose justifying the charge may be commercially unattractive and the subject of resistance, but this has to be balanced against the mischief of a serious challenge in litigation.
It is also worth remembering that although the law on penalties does not apply to a charge levied on the client's insolvency, in principle it can apply to a charge levied as a result of a breach of warranty and very careful drafting is necessary to protect the Financier's interests. Further, although rumours circulating in the industry as to the desire of Insolvency Practitioners to litigate against termination charges have yet proven unfounded, there is no room for complacency and in our experience disputes on termination fees and charges are increasingly played out between outgoing and incoming Financiers on ABFA facility transfers."
Friday 12 April 2013 at 5:48 pm
If you are resigning as a Director of a company and you have a personal guarantee, you will not be automatically released from the personal guarantee.
You have to give notice or agree with the bank in some form that the personal guarantee is not valid. If everything is amicable with respect to the shareholders, board and bank then it is a relatively easy process; just agree with the board and the bank for the personal guarantee to be rescinded (in writing preferably).
However, this can sometimes be difficult if the there is a political or financial situation surrounding the business, or mixed loyalties and priorities exist, all of which creates tension around taking such an action- all sorts of sensitivities could be involved.
In particular, giving notice on a personal guarantee could instigate a withdrawal of facilities by the bank in many circumstances.
Relying on verbal assurances leaves the door a little too open, so a measured approach needs to be adopted so as not fall either side of the tight rope.
There are a number of things that can be done to mitigate the situation. Given the sensitivity surrounding such issues it is always best to talk with us the dynamics of the situation in order to consider what the best approach is.
So if you find yourself in this situation, please contact us, we will be able to help.
Thursday 21 March 2013 at 3:12 pm
The recession of 2009 took its toll on my business and I had to place it into voluntary liquidation. I knew this would, in turn, trigger the bank calling in my personal guarantee, but I had no choice. This caused great stresses on me and my family. I was put in touch with Mel by an old colleague of his, and Mel immediately put me at ease as he calmly explained the processes of how we could tackle it. This, in itself, was a huge release of pressure in the first instance.
Further through the process, Wendy also took a pivotal role in leading the way forward, and through Mel and Wendy’s expertise and knowledge, and, of course their professionalism and negotiation skills, I have now settled on a fifth of the total amount due, payable in manageable, interest free instalments.
I would have absolutely no hesitation in recommending Mel and Wendy (and their support teams) to anyone who is unfortunate enough to find themselves being called upon for a personal guarantee. Their hard work has given me a great result, and more significantly, allowed me to focus on the more important things in life – my family and my new business! Thank you.
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Monday 11 March 2013 at 10:45 am
The Office of Fair Trading has warned RBS of being too harsh in using charging orders to enforce debt. They consider the breach so severe that if RBS does not comply with the requirements set out by the OFT the bank risks losing their consumer credit license.
The OFT wants to protect consumers from unfair orders. They found evidence that the banks were not always taking account of customers' efforts to repay debts using a debt repayment plan or other method, and that many charging orders were used to secure relatively small amounts of debt, sometimes below £5,000.
David Fisher, OFT Director of Consumer Credit, said 'Lenders are entitled to use charging orders but they must do so proportionately and not to secure relatively small amounts of debt. Where we consider the use of charging orders to be unfair or oppressive we will take action to protect consumers'.
RBS/Natwest state they have changed their policy in this regard and that the cases that were reviewed preceded the change in policy (2008-2009).
There are no amounts specified in the requirements as to what would be considered reasonable in terms of value, but the Citizens Advice Bureau has carried out a study on whether or not a threshold should be set and if so as to what amount it should be.
In their report 'Out of Order', they state, 'We believe that charging orders and orders for sale should never be used to enforce consumer debts except in cases where a consumer has fraudulently obtained the credit or where she/he has repeatedly and willfully neglected to engage with the creditor to address the debt problem.'
Having examined a sample of 1,996 CAB clients who were suffering from debt problems they believed the appropriate level should be £41,200. However, if the threshold were to be set at £25,000 then 95% of the CAB clients in the study would be protected.
For more information on the requirements imposed on RBS and NatWest, you can view the relevant Press Release on the OFT website here.
Friday 01 March 2013 at 5:49 pm
"The advice and help your company gave me in helping to settle my Personal Guarantees was perfect and helped obtain a very good settlement".
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Thursday 21 February 2013 at 3:21 pm
"I had to liquidate my company and my life was turned upside down. The bank was causing me all manner of problems and adding to the stress of the fact that I had no income whilst I was looking to go from running my own business back into employment. Luckily, I was told about Personal Guarantees and given Mel’s details. They managed to help me negotiate with the banks and I have ended up paying only a third of what I owed. My piece of mind has been restored and my life can continue. Thank you all for your help, advice and support at this most difficult time".
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