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Bank Guarantee Claims

Challenging a creditor’s right to call a personal guarantee

Personal Guarantees are more common now than ever and creditors can be quick to take action against a guarantor. However, not all personal guarantees are enforceable. Patrick Selley explains how you can defend a guarantee claim.

If you have given a personal guarantee and the creditor is seeking to enforce it, you should seek legal advice first as you may have grounds to challenge its validity.

Patrick Selley, who specialises in bringing claims against banks, financial advisors and financial institutions, explains that despite some creditor's best efforts, many individuals have successfully avoided some or all of their liability under a personal guarantee.

Bank Guarantee claims - Full article 


Mis-selling of Interest Rate Derivative Products

Have You Been Mis-Sold A Swap?

The mis-selling of interest rate caps, swaps and collars to SMEs hit the headlines recently, and the leading banks have found themselves under the spotlight of the Financial Services Authority as it considers a full-scale investigation into the alleged mis-selling of complex financial packages.

Most businesses borrow at rates offered by their bank, which will typically be at a floating rate based on LIBOR (London Inter-Bank Offer Rate) plus a margin for the bank. Interest rate volatility can have a dramatic impact on financing costs and cash flow for business borrowers. The most common tools used to minimise exposure to interest rate fluctuations are swaps, caps and collars. These derivativeproducts represent a highly specialised area of financial services requiring considerable understanding.

The problem is that the products banks offer to borrowers to reduce their exposure to interest rate fluctuations can themselves have hidden risks and costs which are at least as damaging to a borrower as the interest rate fluctuations they were designed to guard against. It is estimated that tens of thousands of these derivative products have been sold, mainly between 2005 and 2008. However, as interest rates have fallen to historic lows in the last few years borrowers can find themselves tied in to unsuitable products by the extortionate and unexpected costs involved in moving to a more appropriate product.

Mis-selling of Interest Rate Derivative Products - Full article 


Personal Guarantees

Options for Guarantors

As the name suggests, a guarantee is a contractual promise to pay the liabilities of another. The guarantor is typically a shareholder, director or group company with assets. The debtor is typically the guarantor’s company. A guarantee can be an obligation either to pay the liabilities of the company or to ensure that the company performs its obligations to the lender.

A guarantee is therefore essentially a contract and in particular a contract of ‘suretyship’. Because the surety (guarantor) may not necessarily be directly involved in the primary relationship between the borrower (company) and the lender (bank) the law of suretyship, through principles of equity, has developed to permit additional defences to guarantors in certain circumstances.

What is a Personal Guarantee? As the name suggests, a guarantee is a contractual promise to pay the liabilities of another. The guarantor is typically a shareholder, director or group company with assets. The debtor is typically the guarantor’s company. A guarantee can be an obligation either to pay the liabilities of the company or to ensure that the company performs its obligations to the lender.

Personal Guarantees - Full article 


Who Is Liable For Bad Investment Advice

Challenging a creditor’s right to call a personal guarantee

In these unstable market conditions many investors have lost money and sometimes this has been due to negligent financial advice. Patrick Selley describes the options open to you when a financial adviser fails to take reasonable care in their advice.

With two years of unstable market conditions many investors have suffered losses and everybody knows someone who believes that they have been the victim of poor or negligent financial advice which has resulted in a significant financial loss.

The global economic downturn has led to numerous investment funds performing badly and losing value quickly. Often the results of such a loss are causing real suffering to the whole family and may even cause a change in the future education of the children.

Liability For Bad Investment Advice - Full article 


Diversion of Business

When your employees become competitors

Competition is in the very nature of business and is something that free markets pride themselves upon. However, what should you do if you discover that others with knowledge of your business, such as senior employees, have assisted your business competitors or become competitors themselves?

The first action businesses typically take is to gather as much evidence as possible and then to dismiss the employee for gross misconduct or to suspend them (assuming of course it is deteted during their employment). This may well stop the situation from getting any worse, but what about the lost opportunity and thus lost profits that your business has suffered? Does the law provide for compensation to be paid to you and by whom?

Diversion of Business - Full article 


Undue Bank Pressure


Options for borrowers

Most businesses have some bank indebtedness and, given market conditions, this is typically secured by a complicated series of debentures, fixed/floating charges, personal and group guarantees and deposits. Together such security documentation gives banks a great deal of leverage when borrowing businesses get into financial difficulties and become unable to comply fully with the terms of the relevant bank facilities.

There is something of a perfect storm at present in the banking market following the collapse of Lehman Brothers and the ensuing ‘banking crisis’; not only has the suite of security documents which protect banks never been more draconian, but also, given the pressure on banks as a result of recent fines, the desire of some banks to pull out of certain markets and the economy in general, banks have never been quicker to use these powers.

Undue Bank Pressure - Full article 


 Patrick Selley

Profile: Patrick Selley - Keystone Law
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Profile Patrick Selley

Patrick is an experienced commercial litigator who has taken many cases to trial in the High Court and the Court of Appeal. Patrick strongly believes in using flexible approaches to dispute resolution; he is a qualified mediator and a Fellow of the Chartered Institute of Arbitrators. Previously, Patrick has conducted professional negligence defence work, but he now acts for claimants, particularly against solicitors and financial advisers.

Patrick was admitted as a solicitor in the UK in 1983 and in Hong Kong in 1986.

Patrick is a keen exponent of mediation from the outset having been a director of ADR Net and, with Bond Pearce, a branch founder of the Centre for Mediation in the 1990’s. Trained with both CEDR and ADR Net Patrick has successful experience of many mediations both as mediator and advocate. In addition to his work as a litigator and a mediator, Patrick also runs mediation training courses for non legal professionals.

 

Articles

  • Personal Guarantees
  • Undue Bank Pressure

    Options for borrowers

    Most businesses have some bank...

  • Bank Guarantee Claims

    Challenging a creditor’s right to call a personal guarantee<...

  • Diversion of Business

    When your employees become competitors

    Competition i...

  • Who Is Liable For Bad Investment Advice

    The options open to you when a financial adviser fails

    ...
  • Mis-selling of Interest Rate Derivative Products

    Have You Been Mis-Sold A Swap?

    The mis-selling of in...

  • Banks face rules to curb mis-selling

    Source: Reuters - Wed Sep 5, 2012 1:02pm BST

    ...
  • My bank has called in its loan

    Source: FT - Fri April 26, 2013

    Two years ago I took...

  • RBS sued over banking tactics

    Source: The Sunday Times - 22nd February 2015

  • Business borrower? What to do if you’re affected by mis-selling
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