Business partner in receivership; implications for me re joint debt

[guarantor]

I am one of two directors of a limited company, who ended up owing circa €500k to one of our big banks. This bank has succeeded in getting a judgement against both of us for that amount plus costs on foot of personal guarantees. A judgement mortgage has been placed on my family home which I jointly own with my spouse. I have no other assets.
My fellow director, as an individual and with others, owes various amounts to the same bank. This bank has now appointed a receiver to deal with/dispose of his assets to satisfy the debts.
With regard to the €500k mentioned above, which is owed jointly/severally by him and I, could the receivership process result in the satisfaction of all his debt to that bank including mine?

The company has no assets and will be wound up in due course

 

[kmick]

Receivership applies to the company.
I may be wrong but the personal guarantee which has resulted in a judgement mortgage on your family home does not go away. Even worse you are potentially liable for all the 500k as you are jointly and severally liable.

Did your wife sign the personal guarantee?

 

[Brendan Burgess]

With regard to the €500k mentioned above, which is owed jointly/severally by him and I, could the receivership process result in the satisfaction of all his debt to that bank including mine?

An interesting question.

Say that he owes the bank €2m jointly and severally with you and with others. If the Receiver sells his property for €3m, that will pay off the debt and the bank won't care any further. They presumably will release the judgement mortgage.

However, I think your colleague could then come against you for €250k because you did not pay your share to the bank.

If you paid your share to the bank, the Receiver would only take €1.75m from the sale of the assets.

However, this seems like a theoretical position. If he had surplus personal assets, he should have disposed of them himself to pay off his liabilities to the bank.

Your bigger concern as Kmick says is that the bank retains a hold on half your house, or all your house if your wife also signed the guarantee.

Brendan

 

[guarantor]

Re kmick:

The company does not come into this. The judgement was against the two directors in a personal capacity on foot of personal guarantees.
My wife had nothing to do with the company and so did not sign any guarantee.

 

[guarantor]

Thanks Brendan,

My thinking is that the receivership being imposed is to satisfy the debts. The bank probably doesn't care who pays as long as they get their money.
The bank knows I have no other assets so there is no point in moving against me.
Similarly my colleague knows that.

 

[Brendan Burgess]

The bank knows I have no other assets so there is no point in moving against me.
Similarly my colleague knows that.

Do you have equity in your home? If so, it's worth going against you.

Brendan

 

[guarantor]

Brendan,

There is an outstanding mortgage for €100k on the family home which may be worth €250k. So 50% of that would amount to my portion.
Just in the interests of clarity, in case it might be construed that I am piggy-backing on another's misfortune, all the assets that I held heretofore have gone to pay other creditors. Alas the cupboard is bare.

 

[Brendan Burgess]

The cupboard is not bare.

You have €75k worth of equity in your own home. The good news is that they are likely to just register it and take no further action until you sell your home.

Brendan

 

[guarantor]

Thanks Brendan, looks like I won't be changing my address until the undertaker calls.

 

[Bronte]

With you always owing at the back of your mind that they could come after the home for your share.

Do you actually own only half. Who is paying the mortgage. It is my opinion, that the person who has paid the mortgage has a higher equity share even if property is in joint names. So far I have not seen a court case on this, in relation to bankruptcy/debt etc, but yes for family law cases.