# personal guarantee for company in liquidation



## bobbyb (13 Oct 2010)

Hi guys/girls.

This is my 1st post on the site (I have searched for similar threads).

Basically my sister is in a situation where the bank are trying to repossess a commercial vehicle after her business went into liquidation. Even though she signed a personal guarentee they are not offering her the opportunity to personally pay them. The car is a 07 worth about 4-5k in a repo auction, 12k due on the loan. She is now working and has an income but they are using her previous 4 or 5 months credit as a means of refusing opportunity to actually pay the bank.

As anyone any advice or experience in how to resolve this situation? Ombudsman is involved and has offered advice, summary of which is get a final letter from bank stating their position. They are refusing to issue letter and have ordered repo man to collect car.


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## Brendan Burgess (13 Oct 2010)

Is the car leased or on Hire Purchase?

If it is leased or on hire purchase, the car is owned by the bank and not by the company or your sister. If the company which entered into the agreement is in liquidation they are right to take the car.

Is there a liquidator appointed to the company?


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## bobbyb (14 Oct 2010)

Thanks Brendan,

The offical title on the document is "unregulated business hire purchase agreement". Started in Oct 07, up to date payment wise until this summer. The company went into voluntary liquidation in July.

I understand they are within their rights to take the car but she is offering to keep up the payments. Surely if someone offers a personal guarentee then they must breach that guarentee before the bank can take the car or else the personal guarentee is worthless?


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## Brendan Burgess (14 Oct 2010)

Hi bobby

You are confusing the legal identities of your sister and the company. They are very separate. 

The company has a legal agreement with the lender. That agreement is now terminated.

I can't just continue the payments. You can't continue the payments. Your sister can't continue the payments. The agreement is not with us, it's with the company, in liquidation. 

Having said all that, the lender will have a car which they don't want. She should talk to the bank about buying it from them.


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## bobbyb (14 Oct 2010)

Thanks again Brendan,

I know the difference between the company and the individual. She has tried to come to an agreement with the bank but they are using her credit history (which has been destroyed by the fact her company owes the bank) against her.

She will soon be personally liable for a few grand and have no car, when she is willing to meet the payments herself. What I am asking is they're any laws out there that at least give her the opportunity to try and pay before its repossessed?

She would have no problem handing over the keys if it meant a zero balance at the end of it.


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## Brendan Burgess (14 Oct 2010)

No. The car belongs to the HP company.

You are asking for there to be a law forcing a HP company to "lease" a car to someone other than the original person that they had the contract with. 

Brendan


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## bobbyb (14 Oct 2010)

The original "person" is a business, if they take the car from the "business" and seek to obtain the balance from the liquidator then that would be fine, but the fact is the personal guarentee kicked in after the business failed to meet repayments. Surely some opportunity must be allowed for the "person" to actually pay them back?

Presuming your answer is going to be the same as above, do you know if any neogiating can be done with regards the balance?

Thanks again,
Bobby


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## Brendan Burgess (14 Oct 2010)

You are still confusing the person with the company.

There is no issue here. The lender owns the car. If the company does not pay the lease payments, they will repossess the car. The liquidator probably could choose to continue the payments, but it's unlikely to be worth it.

Your sister has no rights or obligations. 

You have to understand the position fully, before you can begin to negotiate. As I already pointed out, the bank will not want the car and so your sister could offer to buy it from them. But, in anticipation of your question, no, they won't lend her the money to buy the car.

Brendan


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## Purple (14 Oct 2010)

Does that mean even with the personal guarantee she is still not liable for the balance?


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