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Where Taxpayers and Advisers Meet

Which route most effective to enforce a personal guarantee over a defaulting borrower?

Joined:Sat Oct 21, 2017 9:18 pm
Which route most effective to enforce a personal guarantee over a defaulting borrower?

Postby Bizman » Sat Jun 18, 2022 8:01 pm

I lent thousands of pounds to a UK business, a Limited Company, a few years ago in the form of a loan note (also known as mini-bond). To protect my investment, as well as a legal charge on the business, I got a Personal Guarantee from the Director. He has considerable assets, worth many millions of pounds (verified in writing from his accountancy firm).

The arrangement was I would receive monthly interest payments and get my full capital back after two years.

To cut a very long story short, the Director started defaulting on his payments over a year ago. I've chased him up, through every means possible, a thousand times, but he hasn't paid a penny in interest, nor has he returned my capital.

A couple of weeks ago the Company went into liquidation. This is due to the debts it has to multiple lenders. Having experienced these situations before, the liquidation/administration process is likely to drag on for years and I'm unlikely to get anything back.

Therefore, I wish to enforce the personal guarantee I have. However, I've never had to do that before. I've Googled phrases like "enforce personal guarantee" and various variations of that phrase, but the majority of webpages that appear in the search results guide borrowers on how to wriggle out of their personal guarantee liabilities. It's made me quite worried. I can't find anything much in terms of how to enforce a personal guarantee.

I imagine I could hire a legal firm, but my experience of lawyers hasn't been great in the past and don't want to pay them thousands of pounds at their hefty hourly rates if I can avoid it. However, if that is the only/best option, I'm willing to take the hit and would appreciate any recommendations of who I may contact.

The Insolvency Service told me I may be able serve a statutory demand myself, so I'm wondering if that's a route I should take. I'm not sure if that's the first formal step one should take (subsequent to sending formal demand letters, which I've done) towards enforcing a personal guarantee?

Also, I have grown to discover the Director in question is a very devious and slippery character and if I go it alone, I'm wondering if it'll put me in a weak position and much more likely to fail in my quest to get my money back?

Another option I've considered is a debt collection firm - or a law firm - that may be able to take my case on a 'no win no fee' basis. Do they take on cases like mine? If so, do you have any recommendations of firms please? Feel free to DM me if you're not allowed to make any suggestions publicly on these forums.

I'd very much welcome any guidance you may offer as I'm quite lost. The borrower has been making a fool of me for over a year and this long-standing situation is continuing to cause me infinite distress.

Thanks very much in advance.

Joined:Mon Mar 11, 2019 4:22 pm

Re: Which route most effective to enforce a personal guarantee over a defaulting borrower?

Postby Jholm » Tue Jun 21, 2022 3:28 pm

This feels very much like a legal question more than a taxation one.

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