Are You Selling Your Business?

A word of caution when selling your business which contains personal guarantees for the business loans or overdrafts.

A case was reported in the financial press recently where a business owner had sold their business and duly informed their bank of the sale and their desire to be removed from the bank account as they were no longer a director providing the new owner details at the same time.  Role forward 18 months and the bank are demanding the old owner repay an overdraft of almost £40K racked up by the new owner who has also filed for insolvency….

The mistake the former owner appears to have made was not asking the bank to remove their personal guarantee specifically and requiring the level of joined up thinking by the bank – which through a combination over reliance on computer programmes and overseas outsourcing does not always happen.

Fortunately through some fairly hard lobbying by the newspaper the bank accepted their oversight however in conclusion as part of the business sales process make sure the cancellation of personal guarantees are specifically requested and confirmed in writing plus better still existing business bank accounts are closed.