HSBC Business Account - Limited Company -

[alu1000]

Hi

I was hoping to get some advice regarding the situation my friend has found himself in. He is/was a director of a small limited company and held a business bank account with HSBC with an overdraft of £5000, and a business credit card with a £1000 limit that was paid in full each month. The business has been struggling for the last two years or so, with my friend ploughing a lot of his/his close family’s money into the business. His accountant completed his end of year accounts recently showing a significant loss of over £8k I think. He advised my friend to basically call it a day on the business and close down. The business was a small café running from a rented property so didn’t have any fixtures, fitting etc of significant vale, so he has not been able to wind up the business formally. He received some interest from a third party who wanted to take on the business so he sold the fixtures and fitting for £2k and used the money to pay off his outstanding electricity bill, business rates, water etc. However, he still has the £5000 overdraft plus the total owed on the credit card which has also been debited from the bank account making a total outstanding balance of £5800.00. He was advised by his accountant that he would not be liable for this outstanding debt as it was a limited company. However, he has received a letter today from the bank threatening court action and bailiffs etc if he doesn’t repay the outstanding sum within 30 days. They are stating on the letter that he signed a debenture on the property. He can’t remember signing this document, and doesn’t know what “property” it relates too. The only debenture he remembers signing was for a business loan several years ago when he was a sole trader, before becoming limited.

Another question I have is relating to the business loan. As I said it was taken out when he was a sole trader, at the time he was told he had to take a payment protection policy with it. Two years ago he successfully reclaimed all the costs for the payment protection as it was unfairly sold to him. HSBC wouldn’t simply deduct the payment protection from the loan they said they would have to pay off the existing loan and start a new one minus the payment protection. The loan was paid in full back last year but my friend never signed a credit agreement as it wasn’t ready when the transfer took place, he was told they would send it in the post for his to sign but he never received it. I was therefore wondering if they become unreasonable with the request to pay the overdraft as he obviously hasn’t got that sort of money he could legitimately make a request for the money paid to the loan to be refunded? Could he also so a subject access request to se a copy of the debenture?

Sorry it’s a long winded post, any advice would be gratefully accepted.

Thank you.

[alu1000]

My friend has spoken to the bank today and they have stated that he signed a debenture for the original bank loan he took out in 2004 and apparently this included the overdraft facility. They have sent him a printout of a security schedule:

 

Date Security Property/assets

 

XX May 2004 Joint & Several Guarantee Given By Mr XXXX and Mr XXX

£17,000.00

XX May 2004 Fixed Equity Charge over property

 

 

The original loan he took out was for £15,000, does that mean that the guarantee on the overdraft would be £2,000, if so would he be within his rights to pay back just the £2000? I forgot to mention that he had a business partner at the time the loan was taken out but he resigned his directorship and handed over his share of the business to my friend approximately two years ago. Would it also be worth him doing a Subject Access Request for a copy of the guarantee?

 

thanks again.

Edited May 21, 2009 by alu1000