Directors And Being Personally Liable For The Company’s Assets
A company that is in financial difficulties could face liability for Directors, and being personally liable for the company’s assets. This includes Personal Guarentees that they have signed.
It is standard practice for lenders to take a charge over your property. This is done so, in order that they can recover the debt in the event that you cannot pay and they have had to go to court.
It is possible for some suppliers to request a Personal Guarantee from a director of the limited company. This is as a security for company borrowing.
Signed Personal Guarantee
If a Personal Guarantee has been signed in favor of a creditor, you could be called upon to pay any shortfall that occurs. This can be up to the limit of the guarantee plus interest. This is the case for all Directors and being personally liable for the company’s assets.
At Altion Law our experts, can assist you by trying to ensure that the guarantee is not called in. If the business is not viable, and has to go into liquidation, then it is possible that we will try and reach an agreement. This would be with the lender, or creditor on your behalf.
It is possible to get personal guarantee insurance which should cover the costs.
If you are agreeing a Personal Guarantee, it is always worth taking legal advice. This is to make sure that the guarantee is valid. These kind of guarantees can sometimes be drawn up, or they can be executed incorrectly. Landlords can also ask for Personal Guarantees to cover for rent arrears. The liabilities are under the lease from you. Landlords can try and call these in. However, if you are building up arrears with the rent then you must take advice. The lease obligations of the guarantee, can be bound in a CVA. The power of a CVA enables you to vacate premises if necessary.
Top Tip: It may be possible to assign the lease to another operator. This can ensure that you are not responsible for the remainder of the rent.
Our team can assist you if you have concerns about liability as a director, your business or future business opportunities. If you would like to have a confidential discussion with a member of our team, please complete our Contact Us Form. We will call you back at a time that is suitable for you, or you can contact us directly on 01908 414990.
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