Continued from page 52
Whilst dealing with a guarantor’s property, it may be prudent to take a charge over the property rather than to take a personal guarantee. If this approach is adopted then if the property is registered in joint names it will be necessary to obtain the charge from both/ all of the owners. If so, it is important that the procedure laid down in the House of Lords case of The Royal Bank of Scotland v Ettridge is followed.
All guarantees should be payable immediately on demand. The guarantee should contain a certificate of indebtedness clause similar to that in the factoring agreement. There should be a wheeling/dealing clause whereby the guarantor’s liability is not reduced or extinguished by any wheeling or dealing by the factor. Whether executing a factoring agreement or a guarantee, I advise that both documents are executed as deeds. The reason for advising
this is so as to try and avoid any technical arguments there may be as to whether consideration has been given.
Most, if not all, factors now require a
copy photograph of any individual guarantor. Such a photograph can be very useful to a process server who may have to personally serve documents upon such a guarantor. It is surprising how frequently the copy photograph supplied to me is virtually illegible – I advise that somebody checks the legibility of the photograph at the outset of the relationship. If the foregoing points are followed, they should help a factor, especially as regards proceedings against an assignor and guarantor – though sadly even if you follow the foregoing there is no guarantee of success. Actions against assignors and guarantors usually take place when the assignor has either ceased trading or become insolvent. This often means that the guarantor has lost his or her main source of income. The foregoing makes it all the more important that action is taken promptly with a view to
securing the factor’s position which in a good many cases means obtaining judgment and thereafter applying for a charging order over any equity that there may be due to the guarantor in a property which the guarantor owns or has an interest in. Good luck.
Declan Gilroy, partner, M & D Law LLP, tel: +44 (0) 1296 436 716, e-mail:
dgilroy@mndlaw.co.uk
Regional seminars packed full of business information O
ver the last few weeks De Vere & Co has been running regional Business Information Seminars’ in Brighton, Birmingham and Manchester. These were open sessions for people working in the invoice finance and ABL industry, and suppliers thereto. I was invited to attend the Birmingham session, so that I could gain an insight into some of the work being done for the Business Money readership, and some of the issues facing them. The afternoon started with Steve Wells, associate director with De Vere & Co, explaining how the credit reference agencies obtain their data and, in De Vere and Co’s opinion, what doesn’t make its way through to the credit agencies but should. He then went on to talk about the validity of Companies House information, emphasising that it is merely a repository for information provided by companies themselves with no accuracy checking or investigation work being undertaken before the registry makes the information available to the world at large. Steve highlighted the sort of issues this causes De Vere & Co in their own educated searching, and for less experienced people this will be amplified. How often, though is information
54 November/December 2010
from this source relied upon prior to the issue of huge sums of money to businesses by the financial services industry?
Next it was the turn of Simi Bains, leader of credit communities and fraud liaison for Dun & Bradstreet (D&B) to speak about their online Fraud Alert System which they host for the ABFA and FLA communities. Simi explained how shared fraud networks actually benefit those involved; members of such a community share experiences of fraud, trading and payment defaults with D&B, who then investigate suspicious behaviour and remove credit scores and limits from those found to be irregular. They provide feedback to subscribed members of the service, some of which include FLA and ABFA members. Simi also confirmed that a new community to enable information sharing for FLA members went live in April 2009, with the addition of ABFA members to the community in July 2009. There are currently 23 FLA and ABFA members signed up and using the service with more still in the process of joining. We were then treated to an interesting but alarming piece by DI Andy Fyfe of City of London Police on identity fraud. He described some identity fraud cases they had been
Business Money
involved in and shared with us the extent of the problem – including dark websites selling fake ID and credit cards, at very cheap prices. He then went on to talk to us about financial services businesses reporting cases of fraud to the police, explaining that even smaller cases, that may not immediately seem large enough for the City of London Police, can be of interest to them, based on other criteria; as the lead force on fraud in the UK they investigate fraud cases for a variety of reasons, based on their own pre-determined priorities.
Steve then finished the afternoon by looking at data that disappears from our systems, the issues to consider when taking a personal guarantee and the concept of regularly monitoring the directors’ assets and liabilities. Finally a brief look at CIFAS and KYC took us to a prompt 5pm close. This was a highly interesting afternoon packed full of useful information – I’m sure everyone in the room took something new away with them. De Vere & Co will be holding more seminars early in the new year and details will be available on their website: http://www.
thedeveregroup.com.
Sophie Grove
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