Case overview – Released from historical personal guarantee liability

Martin was a director of a vehicle hire company. He had previously taken out a personal guarantee on a bank loan. He sold his business, with no outstanding debts, in 2014 and notified his bank.

The personal guarantee had no end date and was an ‘all monies’ guarantee, not specific to the original debt, and could be used by the bank to recover any future debts the company might owe the bank.

At the time that he sold the business Martin didn’t obtain a release from the guarantee from the bank, believing he did not need to because the debt had been repaid. The bank appeared to have known he had sold the business and seemed to have asked Martin whether he could introduce them to the new owners.

In 2022, the business was dissolved by the new owners, owing the bank money. The bank contacted Martin asking for the debt to be repaid, citing that they had a valid personal guarantee from him and that he was liable to repay the business’ debts.

Achieving resolution

Martin originally registered his complaint with the Financial Ombudsman Service, but this case sat outside their case criteria and they were unable to investigate. The case was presented to the bank by the BBRS.

The bank saw that the complaint had merit and worked with the BBRS and the customer to settle the complaint outside of the BBRS’ adjudicative scheme.

The outcome for the customer was that they were released from the personal guarantee and were not required to re-pay the debts of their former business.

On having their case resolved Martin said: “It was an unpleasant surprise to be informed that I was still liable under the personal guarantee for my former business. Although no money was exchanged, and I was not expecting to have to go through this process, the BBRS has helped me to resolve this difficult situation and I’m grateful for that.”

This testimonial is an account of a real customer experience with names and some details changed. Each case that reaches the BBRS is different and customer outcomes will vary.