insolvent lending

insolvent lending

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I have a client who formed a limited company one share holder he and wife are directors. Company purchased two properties for £270,000 with a bank loan £220,000 in 2007. By 2009 the company was insolvent as values fell and income was a fraction of costs, the short fall is about £130,000. The bank then 'forced' him to sign a personal guarantee and also his wife for £100,000 thus gaining accesss to his other business income house assets etc. Now they have forced the issue and the loan is up for renewal, he can't agree to the new terms which would cripple him and the business if not finish him of. The bank are about to issue a Stat Demand knowing what will happen. The question is the loan terms which were reviewed in 2009 when the company was insolvent should have allowed the company togo to the wall but the bank renewed, grabed a safety net, and feathered their own nest, and involved a third party to get what they wanted. Does anybody have an answer for this, any case law, anything ????

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By bernard michael
07th Mar 2012 08:53

Did he take professional advice before he signed the guarantees as to the wisdom of signing or the state of of his business?

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Replying to JKnight:
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By michael1958
15th Mar 2012 16:02

sorry for delay, the bank manager called him in and said sign or we pull the plug, the bank will say we didn't both he and his wife refused legal advice. The fact that they phoned several times a day to see when they would attend and gave them no time to consider options is not relevant. It is very much bank tactics over the last few years, that is securitise the debt and stuff the client. I was with one today and the bank currently have land valued at £120,000 for an overdraft of £50,000 and they are screaming at the client to give them more security. Overkill appears to be the norm.

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