Archive for April, 2019

A Guide to a Directors Personal Guarantee

What is a personal guarantee? Why would I need one?

At the height of the business boom, banks frequently provided loans to companies. But, banks often required that the directors of these businesses sign an agreement, A Personal Guarantee. If the company is unable to repay these loans, the signer, or guarantor, would be personally responsible for the repayment.

A Personal Guarantee is only problematic if the business has breached the terms of agreement of the loan. Although, they have become more of an issue since the 2008 financial crash. Therefore, companies now find themselves in difficulty, and lenders are entitled to pursue bankruptcy against the guarantor if… the guarantor cannot repay the terms agreed when the original agreement was signed.

Limited company vs. sole traders/partnerships

Personal Guarantees are generally signed by directors of limited companies. Sole traders or those who work in a business partnership will often have been issued loans in their names. These loans can put individuals at risk of losing personal assets or even being declared bankrupt if repayment fails.

What if I can’t pay?

If you signed a Personal Guarantee for your limited company and you fail to keep up with repayments, your lenders will pursue you, to recover the outstanding debt. If you go straight to an Insolvency Practitioner, you will find they are legally obligated to try and get the best deal possible for your lenders. Moreover, if your bank account is overdrawn, your creditors can take legal action, and you could potentially be investigated.

What do I do next?

There are always options and you don’t have to face the stress and uncertainty of being liable for repayments alone.Bell & Company are pre-insolvency consultants who specialise in helping people affected by Personal Guarantees.

If a loan has been sold off by your original lenders to a ‘vulture’ fund, the ‘vulture’ fund will pursue debt repayment aggressively. However, Bell & Company’s involvement will help, when dealing with ‘vulture’ funds.

Call Bell & Company on 0330 159 5820. Alternatively, read our brochure or visit our website

What is a Zombie Company?

 

what is a zombie company?

 

What is a zombie company?

A zombie company is simply a company that is neither dead or alive.

In other words, the company is so overwhelmed by debt that any cash generated, is being used to pay off the interest on the debt owed to creditors. In many cases, the debt is not being reduced. With this, the majority of ‘Zombie’ Companies are unable to invest in any future growth of the business. Therefore, are unable to employ more staff.

The first sign that a company is turning into a zombie will often seem like symptoms of unusual health.

However, in some instances, the company will appear to be thriving and its executives will be justifiably proud of this success. But Zombie companies, like zombies in movies, slowly move forward, but only just.

Since they’re only just managing to get by week by week. They can’t hire anyone new and they can’t afford to pay out redundancy, as there’s no cash for a payout. The business stagnates slowly but surely, with sudden growth being as much a problem as a downturn in business.

If you’ve seen any films about these members of the undead, you’ll know that zombies don’t tend to last long. This could be the fate of any zombie company that doesn’t properly address its issues. If you’re paying off the interest on a loan and the interest is suddenly raised, your company can die. If someone business-critical leaves their role for a better job at a company that is enjoying healthy growth and you can’t afford to get someone of the same caliber, your business will slowly die.

Ignoring a zombie company won’t do any good. Unfortunately, they’re often created because businesses ignored signs that all wasn’t healthy in the company finance book. That’s why it’s so crucial businesses get help early on, raising their company back to the land of the living.

How Bell & Company can help

Whether it’s worth refinancing the debt, selling off a non-crucial asset in order to reduce the debt and giving the business a little more cash, or speaking with a business consultancy to achieve a company turnaround, there are ways of helping your business to get back on its feet again.

A business consultancy move will help advise you on the best course of action, bringing a fresh pair of eyes to your company and seeing what you work with daily, before coming up with a plan to rescue your business.

Click to view our Business Turnaround page or call 0330 159 5820 for further information if your company is in a zombie state.


https://www.bellcomp.co.uk/insolvency-worst-happens/

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