My partners and I provide personal guarantee for a loan that was taken out by our company based in Mauritius in 2018 for raw materials for our manufacturing company in West Africa.
Unfortunately, commodity prices collapsed in 2018 and the company was unable to service the debt of $1.4m anymore. The loan agreements and personal guarantees are based on UK law.
The lender verbally called the personal guarantees in 2020 and we negotiated an agreement that required $200k immediate payment and then the balance to be negotiated later.
Payment was made for the $200k.
After months of negotiation trying to arrive at a value that we can pay monthly, the lender rejected and imposed a schedule which the company and shareholders were forced to accept under threat of legal action.
After making 3 payments… we are unable to make complete payment because I am unable to pay.
One of the shareholders has written the lender that we are likely to default because I have refused to pay even though he knows that this is false.
The backstory is that I ran this business and tried to make it work – company is owing my back pay for a few years, and this is one of the reasons I am unable to pay.
The lender has now responded that if we default, they will go to court and claim the full outstanding amount from me. The reality is that I don’t have any asset or funds they can take either in the UK or anywhere else because I am just rebuilding from the situation, I put myself in by letting emotions and not logic drive the last 5 years.
Do you have any advice on how to handle the situation and respond to the lender?
How many other people signed as guarantors for the loan?
Have you spoke with them, and what is the consensus between you all?
If you all signed as guarantor, why would the bank or lender just come after you? As guarantors, you are all just as liable and responsible for the loan. I would ask why was UK law used in the agreements?
Was it a UK bank? Are you the only partner or guarantor living in the UK?
Was the threat of legal action in the UK?
Who was the shareholder who wrote to the lender? They seem to be more in charge??
Sorry for all the questions, but I need a few additional details. And you may need to seek legal advice, when you say “ lender verbally called the personal guarantees in 2020”.
From a debt stand point, if you live in the UK and have no assets, there is very little a bank/lender/collection agency can do. And you could also include this debt in any debt management or insolvency proceedings here in the UK. It would relieve you of the debt, but not the other guarantors.
The debt would also need to be collected here in the UK by a UK collection agency in accord with UK laws and rules.
Let me know, and we can look at this in more detail.