Former director still liable for company's debt

Categories:
Guaranteeing someone's debt
Summary:
Tony agreed to guarantee a loan taken out by a company, of which he was a director. He later resigned as director. The company got into difficulties and couldn't repay the loan. The bank sought repayment of the shortfall from Tony, who disputed his liability.

Tony asked the bank for information about the company’s accounts and why certain bank charges had been incurred. The bank told Tony it could not do that because he was no longer a director.

Our investigation

Tony was unhappy and complained to us that the bank had not given him debt information he was entitled to as guarantor.

We found the bank couldn’t give him the information he sought because he was no longer associated with the company, other than as a guarantor.

However, the bank had not responded to Tony’s questions about his guarantor obligations in a timely manner. The bank acknowledged this and offered to discharge the guarantee if he repaid less than half of the debt.

Outcome

We considered the offer reasonable and recommended Tony accept it. He remained convinced, however, that he should not be held responsible for the debt.

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