The Video Transcription:

In this case, the company had gone into liquidation long before the financial surgeon was engaged. Company deficit was on the order of 2 million. However, the directors, 2 directors had personally guaranteed, jointly and severally, 1.2 million of the bank facilities. It was a valid personal guarantee. The difficulty, in this case, was that the 2 directors, director 1 and director 2, had jointly and severally guaranteed 1.2 million each. The bank could have gone after each director or one of the directors for 1.2 million but they could only yield 1.2 million. However, the difficulty for the 2 directors was they could be liable for 1.2 million.

The settlement, in this case, was to get both directors to obtain 2.5% of the gross amount from their family, friends and Credit Union in order to make a proposal of 30,000 each or, in fact, a lump sum of 60,000 to settle the guarantees of 1.2 million. This resulted in a saving, to the 2 clients, of 1,140,000 pounds. It took 14 months of negotiations to eventually achieve this settlement with the bank. If it’s one thing we are it is we are persistent and resilient.

There are some of you out there who might think “Was the bank not stupid to accept 60,000 when it had valid guarantees of 1.2 million?”. And the answer to that is NO. The bank was particularly financially astute in accepting such a settlement. The alternative for the bank is to issue High Court proceedings against each director, engage solicitors, engage barristers, management time and swearing Affidavits, etc. The total cost could easily be 80,000. And in the course of such a process, the 2 directors would have been forced to engage their own legal counsel, their own barristers, their own time to defend as best as they can or to delay, till they got to a better stage, this judgement. And in the course of defending such judgement, they would have dissipated the 60,000 that was available for the settlement.

Therefore, in simple terms, the bank, by pursuing the legal route, would have lost a further 140,000 because the 60,000 wouldn’t have been available at the end.

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David Murray

David Murray

David is a fully and Highly Qualified Financial Accountant with an unblemished record for almost 30 years.

David has an extensive Academic Record including, inter alia – Gold Medal College of Commerce – First Place Chartered Accountancy (ROI) – Fastest Graduate to Qualify.

David has written many articles on International Trade Finance in Magazines and Sunday Business Newspapers. In addition, has been Late Late TV Show Tested on cases referred by them.

David has extensive Business Experience particularly in Property, Construction, Manufacturing, Equipment, Telecom, Service Companies, SME Sectors in Ireland, UK, Dubai, Poland, etc., Agent in Ireland Bank of Iran, Plc Bank Seminars “Finance for Builders”, etc., etc.

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