VIC Urgent advice - A big banks removal of guarantor

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Zoe10

Active Member
27 September 2017
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I am one of four guarantors and share holders in a commercial loan with one of the big banks. The other three are also Directors, I am not. I was requested by the other three (company) to sign a removal of my guarantee and indemnity for the business loans with “the bank “ and on saying no ( due to unresolved financial issues with them and requesting business mediation ), “the bank” at the request of the company agreed to remove my guarantees and indemnities without my consent.
Do I have any Legal rights here and any feedback and advice would be greatly appreciated.

Harper
 

Tim W

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Apart from being able to use your withdrawal of guarantee
as a device/tool/incentive/threat, being a guarantor
does not in itself give you any other leverage in any other respect.

For example, absent any arrangements that expressly provide for it,
a guarantor typically has less influence than say, a partner,
or a 25% as a shareholder(you are 1 of 4?), or as a director.
Nor does it give you any kind of security or priority as a creditor
over debts owed to you by the business.

In any event, when this business goes south
(which may be sooner than you'd think),
you'll be better off not being a guarantor.
You may find it prudent to start planning to be a creditor of a business in liquidation.
 
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Rod

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Why are you objecting to being removed as guarantor? I would have thought it would be a good thing.

You can still work on the other issues without being a guarantor.
 

Tim W

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Also, be sure that you in fact a guarantor only,
and expressly not a co-borrower.
 

Zoe10

Active Member
27 September 2017
10
0
31
Thank you for your prompt advice.

Firstly, can a bank remove me as a guarantor from a commercial loan at the request of other guarantors without my signature?

Secondly, Tim I don’t quite understand your reference to being a “liquidator”. This business I have been removed from and I am now
just a share holder of, with no yearly dividends ( money hidden everywhere ) refuses to payout my share holdings. Additionally I am owed money, LSL payout etc.
I have been advised I cannot recover, as I am a share holder and I cannot sue them...

To Rod, Thank you.. Yes being removed as a guarantor is a good thing and my residential property has been removed as a guarantee against the business loan, (although one of the 3 is still a guarantor of my homeloan), however as I am not a Director and I was, I believe Directors loans have been accrued to me without my approval and all requests to view financial movements have been denied. These Director 7A loans have been attached to me whilst the other three have none? I was not wanting my guarantees to be removed until other financial matters were resolved. The “bank” has inadvertently sided with the other 3. Now, I see my position as severely weakened and numerous Director loans coming my way.. Additionally, no payout for my share holdings.
 

Zoe10

Active Member
27 September 2017
10
0
31
Thank you for your prompt advice.

Firstly, can a bank remove me as a guarantor from a commercial loan at the request of other guarantors without my signature?

Secondly, Tim I don’t quite understand your reference to being a “liquidator”. This business I have been removed from and I am now
just a share holder of, with no yearly dividends ( money hidden everywhere ) refuses to payout my share holdings. Additionally I am owed money, LSL payout etc.
I have been advised I cannot recover, as I am a share holder and I cannot sue them...

To Rod, Thank you.. Yes being removed as a guarantor is a good thing and my residential property has been removed as a guarantee against the business loan, (although one of the 3 is still a guarantor of my homeloan), however as I am not a Director and I was, I believe Directors loans have been accrued to me without my approval and all requests to view financial movements have been denied. These Director 7A loans have been attached to me whilst the other three have none? I was not wanting my guarantees to be removed until other financial matters were resolved. The “bank” has inadvertently sided with the other 3. Now, I see my position as severely weakened and numerous Director loans coming my way.. Additionally, no payout for my share holdings.
 

Tim W

Lawyer
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28 April 2014
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Firstly, can a bank remove me as a guarantor from a commercial loan at the request of other guarantors without my signature?
Sure. Being a party to the loan (a "borrower") and being a guarantor
(somebody upon whom the bank can call when the borrower(s) don't meet their obligations)
are quite different things.
Secondly, Tim I don’t quite understand your reference to being a “liquidator”.
Put simply, this business is probably doomed.
That means it will go from operating, to Administration, to being in liquidation within a very short space of time.
That means that you will take your turn for whatever you are owed (such as but not only employee entitlements, unpaid pay and commissions, and any capital you have invested without security).
You won't be the liquiidator. You'll be one of the (unsecured?) creditors.
See it coming now, and start getting ready.
At least if you are not a guarantor, you won't be asked to pay other people's debts.
This business I have been removed from and I am now
just a share holder of, with no yearly dividends ( money hidden everywhere ) refuses to payout my share holdings. Additionally I am owed money, LSL payout etc.
Being an employee, being a shareholder, and being a guarantor of a loan are three separate heads of interest. Each carries with it separate rights and responsibilities.
The two things you want to avoid being are a guarantor, and/or a partner.
This is because both of those carry responsibility for debt.
Be especially sure that you are a shareholder and not a partner

I have been advised I cannot recover, as I am a share holder and I cannot sue them...
That's pretty unusual advice. Says who?
To Rod, Thank you.. Yes being removed as a guarantor is a good thing and my residential property has been removed as a guarantee against the business loan, (although one of the 3 is still a guarantor of my homeloan), however as I am not a Director and I was, I believe Directors loans have been accrued to me without my approval and all requests to view financial movements have been denied. These Director 7A loans have been attached to me whilst the other three have none? I was not wanting my guarantees to be removed until other financial matters were resolved. The “bank” has inadvertently sided with the other 3. Now, I see my position as severely weakened and numerous Director loans coming my way.. Additionally, no payout for my share holdings.
As ever, there is obviously extensive back story to your original question.
This is not a DIY situation. You need the advice of a lawyer and an accountant of your own choosing, and without further delay.
 

Rod

Lawyer
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Directors loans have been accrued to me without my approval

Not sure I understand this comment. If it is relation to money owed to you in lieu of dividends, then I thought the loans would be as a shareholder, not a director.

Additionally I am owed money, LSL payout etc. I have been advised I cannot recover, as I am a share holder and I cannot sue them...

Incorrect. You sue as you have rights as an ex-employee. These rights are totally not related to your rights as a shareholder.

I do not see your position having been weakened by your removal as a guarantor. I suspect your biggest weakness is a lack of legal knowledge. The other directors may be breaching numerous director's duties.

As Tim says, you need legal advice to help with your issues.
 

Tim W

Lawyer
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As Tim says, you need legal advice to help with your issues.
Two reasons. And I say this with all courtesy.
  1. You don't know what you're into, how deep,
    or how to fix it
  2. They have no idea what they are doing,
    and won't take any notice of anything you say.
Like most people is situations such as this, you need advice custom tailored to the facts and circumstances of your case.
 
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