Personal Guarantee Case Study

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Company: Electrical Engineering Business

Type of Work: Personal Guarantees


Our clients were the former directors of an electrical engineering company that was forced into an insolvency procedure, following a couple of its major customers going bust. The company’s cash flow was instantly crippled by the hole caused by the down fall of its customers, not only in terms of the uninsured loss on the balance sheet following 2 debtors going bad, but also in terms of cash flow and sustainability for the short to medium term, as the company was geared up for the future in relation to motor vehicles, plant, machinery and overall costs including the payroll.

The company’s bankers called in their loans and subsequently instructed an insolvency practitioner to come in to undertake a review of the business, on behalf of the Bank.

The insolvency practitioner submitted their report to the Bank, who then appointed the same insolvency practitioner to act in the winding up of the directors’ former business.

Personal Guarantees

Whilst the directors supported the business with their time and their own personal money, they also obtained funding from bankers and finance companies (purchase of plant, machinery and motor vehicles). The company and its directors were required to sign personal guarantees (“PGs”), in order to obtain funding to finance trade and acquire assets under various types of finance agreement (lease purchase and hire purchase agreements).

In addition to supplying PGs to the traditional lenders, there were several companies who supplied key components to the business, who required PGs to be provided in order to open and operate trade accounts with them.

Insolvency of Business and Impact on Personal Finances of Directors

The bankers, finance companies and a couple of trade creditors who were owed money by the company, subsequently pursued the directors for the personal guarantees that they had provided to the various parties, when the company was actively trading.

Instruction to Advise and Assist


My Insolvency met with the various directors to understand their

  • Personal situation – assets and liabilities
  • The extent of personal guarantees provided to the various claimants
  • Future aspirations in business and professionally
  • Personal situation – income and expenditure


Having understood the position of the individual directors and their exposure under the various PGs, My Insolvency entered into communications with the various claimants and achieved individual settlement agreements with the various parties. Thereby, avoiding a formal insolvency procedure for the directors, as neither of them wished to be made bankrupt, nor did they wish to enter into an Individual Voluntary Arrangement (“IVA”).

If you have provided personal guarantees and think your business is approaching insolvency, then get in touch as soon as possible, to find out what your options are. We will always provide you with the options that are best suited to your individual circumstances by giving you honest advice.

If you would like to know more about options, when dealing with aggressive creditors threatening proceedings following the winding up of your business, then speak to one of our specialist team on 0800 009 6106 or

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