Company directors or owners are often required to provide guarantees to the bank to support the company’s borrowing. This is particularly the case if a company has a high level of borrowing or is a new business. Guarantees given to the bank are normally limited to a fixed amount but can still be a significant amount of money which the bank will seek to recover if the company gets into financial difficulties.
If you are the director or owner of a group of companies then often banks want every company in the group to give a cross-guarantee making all the companies equally liable for the debt owed to the bank. This is to discourage borrowers from shifting assets within the group to try and protect them from the bank.
Sometimes, banks go even further and ask for guarantees or security from partners or spouses of directors even if they do not have any direct ownership or involvement in the company. In such cases, the bank often requires that third party to take independent legal advice so that they have a full understanding of both the risks they are taking in providing the guarantee and the potential liabilities the company has to the bank which the third-party may become liable for if the company cannot repay the debt owed to the bank.
Bank guarantees are complex documents and the banks can be very aggressive when seeking to enforce them. If you have a dispute with a bank over a guarantee and you think there may be grounds to avoid the guarantee, please contact one of our specialist commercial litigation solicitors today.
Our Approach & Experience
We pride ourselves in providing swift and authoritative advice and taking a proactive approach to disputes relating to bank guarantees. We will look for robust and commercial solutions to try and reduce your exposure wherever possible.
As an all service law firm, we are well placed to provide comprehensive legal advice to assist clients on issues surrounding bank guarantees. Our commercial litigation and corporate departments work closely together to provide our clients with the right legal and commercial advice.
We can offer a variety of litigation funding options to eligible clients.
We are client focussed, dedicated and approachable. Myerson’s commercial litigation team are ranked as top-tier in the Legal 500 law firm directory and are led by Adam Maher who is described as an “excellent communicator and an outstanding team leader” who “harnesses the best from his team”. Deputy head of the team is Jonathan Hassall who specialises in financial disputes.
We act with integrity. We do not fee build at our client’s expense. We provide experienced and commercial advice to ensure our clients achieve the right outcome at the appropriate cost.
We understand the stress that can be caused when dealing with issues relating to bank guarantees, particularly when litigation is involved. We work closely with third parties such as barristers to assist our clients in getting the right information and advice.