Close

You are about to be redirected to our secure payment partner, SOTpay, to complete your transaction.

Are you happy to continue?

Cancel Continue

A Case Study:
Personal Guarantees

<- Back to News & Insights

We recently worked with a large equipment rentals company in a professional capacity to resolve a high value dispute with one of their clients involving credit under a Personal Guarantee.

A Personal Guarantee is known in the business industry for businesses who require credit for goods. An agreement is entered into between the parties to secure credit against the director of the business, in their personal capacity, whereby if the business fails to pay, the director becomes responsible.

The dispute centred around whether the Defendant could be made liable under the Personal Guarantee Agreement. The Defendant was alleging that he had terminated the Personal Guarantee and transferred his shares of the business. However, this had been post incurring the credit and it still being owed. We argued that termination in this regard does not cancel any previous obligations which had arisen by the point of termination and that the Defendant remained liable for the credit he had incurred and failed to pay prior to any termination or resignation as a director.

The Defendant had instructed their own solicitors and they were persistent in alleging that there was no obligation for the Defendant to pay. Court proceedings commenced but dispute resolution also began between the parties. The Defendant initially was only prepared to settle on a “drop hands” approach and the parties to walk away from the claim bearing their own costs. However, by using early dispute resolution to provide a concise legal and strategic review; we managed to negotiate settlement in this high value matter and avoid trial.

This was achieved by:
  1. Engaging with the Defendant at an early stage.
  2. Reviewing the Defendant’s assets and net worth.
  3. Being practical and reasonable in agreeing a payment plan with the Defendant.
  4. Preparing early witness evidence from the parties involved in the agreement.
  5. Being strategic on the contractual terms of the Personal Guarantee and setting these out to the Defendant.
  6. Continually engaging with the client as to their options and next steps.