Guarantor director can’t outrun GK recovery team

Image: Brad Mills/bradmills/Unsplash
Image: Brad Mills/bradmills/Unsplash

This case study shows how a thorough and persistent approach can result in success against a director determined to frustrate creditors.


In October 2018 we were instructed by a finance company client to recover a debt of c.£74,000.00 from a company under two sale and lease back agreements and from its directors who had provided personal guarantees.

After commencement of recovery action, the directors denied liability to our client and a number of other creditors. They claimed to have no knowledge of the finance agreements and that they did not sign any personal guarantees.

Director one claimed to have been outside of the business with little hands on involvement and that finance agreements would not be dealt with by him, but rather by other employees or the finance director.

Bankruptcy proceedings were commenced by another creditor against director one who disputed liability. This was adjourned whilst two Individual Voluntary Arrangements were put to creditors for approval.

Director one had sought to circumvent bankruptcy and avoid creditor claims by proposing an IVA to creditors and failed to identify which of debts were disputed. These were rejected by creditors in light of director one’s failure to make reasonable modifications.

At a disputed hearing of another creditor’s petition, the petition was dismissed on the basis of the dispute. Another creditor presented a petition the following day. The second petition went to a final disputed hearing. The judge found in his judgment that there was evidence that the debt was disputed on substantial grounds and was prepared to dismiss the petition.

Our client steps in

Our client, who had served a statutory demand prior to presentation of the second petition, applied to be substituted as petitioning creditor. At a substantive hearing this application was granted, and directions were given to take the matter to a final hearing on our client’s petition which again director one said was disputed.  

The debtor’s main ground to dispute our client’s debt was that he did not sign the agreements and person guarantees. The evidence against this proposition presented to the Court was as follows:

  • An Individual Voluntary Arrangement (IVA) proposal including the debt of our client as an admitted debt.
  • A set of instructions to a handwriting expert from the director one’s solicitor conceding that the signature on the personal guarantee was their client’s;
  • Correspondence between director one’s solicitor and the previous petitioning creditor conceding the same point;
  • A handwriting expert’s report that confirmed positively that the signature was his
  • A further expert’s report confirming that the signature was his

Bankruptcy orders

Given the strength of this evidence the judge found that director one had no real prospect of disputing the sums owed to our client and was prepared to make a bankruptcy order.

As for director two, a petition was presented against him by another creditor which he sought to dispute on the grounds he did not sign any of the agreements. The judge was not prepared to accept the case put by director two and made him bankrupt. The judge observed in the judgment:

‘I have found him to be utterly untruthful. I think he may genuinely believe what he says but I have no doubt whatsoever that he is “obfuscating”. I am of the view that what he is seeking to do is to hide behind a myriad of smoke and mirrors to avoid the fact that, as a director, he entered into loan agreements, he offered, entered into secured, signed personal guarantees and knew that. Yet he comes to court and says he did not, relying on some digital methodology prejudicing him in some way’

All creditors had been put to significant costs and were extremely frustrated in the way the directors had gone about disputing the debts..


Greenhalgh Kerr’s success in this matter is attributable in part to the supportive relationship with our client and our client’s persistence in pursuing what was owed to them, as well as to the diligence of solicitor and director Steven Owens in preparing the case. Our client was represented throughout by employed Counsel, Alex Worthington.

Greenhalgh Kerr
Olympic House, Beecham Court,
Smithy Brook Rd,
Wigan WN3 6PR

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+44 (0)333 200 5200

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We are confident in our work and we know that recoveries is a key part of a lender or creditor’s business. We have designed our pilot projects to give lenders and creditors the comfort and confidence in our service before formally and fully switching recoveries providers. This time also allows new clients to benchmark our service levers and results against existing providers and others.

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