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Company ceased trade, small HSBC loan o/s

Technically insolvent... suggestions?

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My client, small ltd co, has recently ceased trading. There's no overdrawn DLA, client has just had a bad final period of trade which resulted in a loss.

Balance sheet is c£4k net liabilities, which is basically a small overdraft and credit card balance due to HSBC. There is a personal guarantee with HSBC.

There's no funds to pay a liquidator. Client accepts the balances are outstanding and plans to pay them from personal funds, which are tight at the moment. 

Does anyone know whether HSBC would port the balance to a personal loan so we can shut the company?

Does anyone have any other alternative practical suggestions on what the client could do? E.g. given the financial state of the company would HSBC potentailly take a settlement amount to avoid having to enforce the personal guarantee?

 

Thanks in advance

Replies (5)

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By johngroganjga
06th Nov 2019 10:06

If the client is willing and able to repay the bank with personal funds what is the problem? Let him do so. Then close the company. Job done.

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Replying to johngroganjga:
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By Carl London
07th Nov 2019 10:38

He is willing, but not able to at present. It would need to be over a year or 2. Personal finances very stretched. He's not the best at managing money, hence ceasing trade and getting a PAYE job now.

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By ireallyshouldknowthisbut
06th Nov 2019 10:29

Or alternatively, invite HSBC to wind up the company......or agree to cut a deal on his debts so as they dont have a big liquidation bill of the same size as the debt.

They presumably don't know yet he is willing to repay the debt without a fight.

I think it depends how hard your client wants to play. Some people would be aghast at not paying back the money, others would be shocked that people wouldn't try to get out of it.

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Hallerud at Easter
By DJKL
06th Nov 2019 11:16

HSBC's attitude will be determined by whether your client has any assets, strength of the PG (how it was executed may have a bearing- did your client have legal advice?) and myriad other factors. In addition your client should consider carefully how , if at all, their personal credit rating might be impacted by seeking a reduction.

Certainly with credit card debt I have negotiated some reductions for a friend, but he was mentally unstable both when the debts were incurred and at the time I was dealing with the matter, no idea of attitude without such mitigating factors.

What your client really needs to ask themselves is if the debts are that small do they want all the grief.

At worst case I expect they could possibly come to a deal paying down over time.

The issue with a "new" replacement loan will likely be, does your client's current income etc qualify hin/her to get such a loan?

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By lesley.barnes
06th Nov 2019 11:19

I had a client with HSBC the Directors had to give a personal guarantee for their limited company for the credit card and overdraft. The company went through a bad patch, they couldn't repay the overdraft so HSBC called in the personal guarantee and converted it to personal loans for the directors. They paid the loans off over two years and it included interest. HSBC had written the personal guarantee in such a way that if one person stopped paying the other was liable for the remaining debt. Based on this I would say that HSBC will require the Director to repay the credit card debt otherwise there would be no point in a Directors Guarantee. Whether they would convert it to a personal loan and how much it would cost is something the Director would need to explore.

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