# personal Bank guarantee



## accsys (22 Mar 2011)

Does anyone have information on the following...??
I recently resigned from a company where I was a director. The company is still trading but I have a personal guarantee with the bank for a loan made to this company. How would i go about removing myself from this guarantee?


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## JoeB (22 Mar 2011)

this raises some issues.

Did the company require you to sign a personal guarantee? Were you paid for this? The company has clearly benefitted from you giving a personal guarantee, so is this gain accounted for in the company books?

If the guarantee is personal then it seems there is nothing you can do, unless such a guarantee is illegal and should never have been accepted by the bank. 

If the guarantee was made by you in your professional capacity, and you were acting as an officer of the company then when your role as an officer comes to an end then maybe the guarantee also comes to an end. This seems unlikely as it wouldn't really be described as a personal guarantee.


I think this situation is unusual, and I'm not sure how a court would view this. I think the company was wrong to ask employees to give personal guarantees, and the bank was wrong to accept it. 

Or perhaps the bank weren't wrong, but it should have been made clear to you that the guarantee would outlive your employment.

The company must try to repay the loan I'd imagine.. they can hardly say 'well, we won't pay, as Mr X has given a personal guarantee so we'll let him pay instead'.


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## Diego Murphy (22 Mar 2011)

accsys said:


> Does anyone have information on the following...??
> I recently resigned from a company where I was a director. The company is still trading but I have a personal guarantee with the bank for a loan made to this company. How would i go about removing myself from this guarantee?



Unless there is some sort of technicality, realistically the only way to get the guarantee cancelled is by asking the bank to release it.  If the borrowing is still outstanding, this is highly unlikely.  Unless the company can offer satisfactory security in place of the guarantee, then the guarantee is likely to remain in place for the duration of the borrowing.


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## dewdrop (22 Mar 2011)

Did any other director sign the guarantee or were you the only person who signed. I have in mind if others signed the bank might consider releasing  you if they regarded the others as good marks. Incidentally the remaining Guarantors would have to agree to your release .


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## accsys (22 Mar 2011)

3 other directors signed the guarantee. The loan was issued in the company name but the bank asked for personal guarantees on it, signed by each shareholder. Now that I am exiting the company for a new job can I get out of this guarantee??


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## dewdrop (23 Mar 2011)

the fact you signed when you were a director does not release you from liability unless the bank agrees and likewise the remaining guarantors. I think people in your situation often argue, with some justification, that they only signed the guarantee in view of the fact that they were directors/shareholders and consequently they feel no longer liable when they cease such roles.  Banks usually will not accept this arguement. usually if a person writes to a bank seeking cancellation of their guarantee the bank, if not prepared to do so, will formally call on you for payment of foot of your liability which will be the amount of the guarantee or the actual debt which ever is the lesser..so this aspect should be borne in mind.  Apologies for this disjointed comment.


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## JoeB (23 Mar 2011)

I think this is quite subtle.

I don't think you can give a personal guarantee in your capacity as an officer of the company. You can only give a personal guarantee in your personal capacity, but when acting on behalf of the company you are, by definition, acting as an officer of the company and it would seem to me that you are prohibited from acting in your personal capacity when you are acting as an officer of a company.

This is quite subtle, and possibly wrong.. but is there a glimmer of hope here?


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## accsys (23 Mar 2011)

Thanks for your comments. I think I will need to have a chat with the Bank and see what they say.


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## dewdrop (23 Mar 2011)

As i said you would need to be careful in talking to the bank in case they deemed your comments as withdrawing from the guarantee thereby resulting in the bank demanding payment from you.


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