angrysaveruk
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Post by angrysaveruk on Nov 14, 2017 16:43:43 GMT
What are peoples opinion on the Personal Guarantees used to calculate the LTV on some of the loans on AC? How does AC determine if a personal guarantee is worth the paper it is written on?
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SteveT
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Post by SteveT on Nov 14, 2017 16:57:36 GMT
Which loan are you looking at? Usually, IIRC, Assetz don't include a £ value against a PG in their LTV calculation, although it would remain part of a loan’s package of security.
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trouble
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Post by trouble on Nov 14, 2017 17:43:00 GMT
Unsupported PGs do not have any bearing on the LTV
Supported PGs do as the deeds (for example) support the PG which supports the limited company (usually) borrower
If a PG is unsupported then if someone has no assets it's worth nothing, if someone has lots of assets then unless they can dispute the validity of the PG or legitimately move those assets out of their name, then the individual has a call to make when the PG is called up, they can either play ball and pay up in a controlled way, or they can risk it going legal with assets being subject of a court forced sale ..... or they could just sell up and move to Panama before it all goes wrong.
Personally I like to see a PG, even if only limited to the amount a guarantor could realistically afford to contribute in a gone situation. What they should consider is taking out PG Insurance.
As an aside what a guarantor says they are worth is worthless in itself as there's never an audit done on their asset (and liabilities) statement by any lender.
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markb
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Post by markb on Nov 14, 2017 19:09:21 GMT
Another problem is that even if the guarantor does have the assets at the time that the loan is granted, then by the time the loan finally defaults they might have already sold those assets in order to inject more funds into their struggling business, as part of trying to avoid the default happening (but instead, only delaying it).
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angrysaveruk
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Post by angrysaveruk on Nov 14, 2017 19:21:54 GMT
Supported PGs do as the deeds (for example) support the PG which supports the limited company (usually) borrower Is a supported PG similar to a Lien?
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blueninja
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Post by blueninja on Nov 14, 2017 19:31:15 GMT
What are peoples opinion on the Personal Guarantees used to calculate the LTV on some of the loans on AC? How does AC determine if a personal guarantee is worth the paper it is written on? Personal guarantees have little bearing in my book, its too easy for personal assets to over valued, moved to a spouse or just plain vanish.
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markb
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Post by markb on Nov 14, 2017 19:38:51 GMT
I think that granting a lien would be an example of a way to support a PG.
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trouble
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Post by trouble on Nov 14, 2017 23:11:52 GMT
Supported PGs do as the deeds (for example) support the PG which supports the limited company (usually) borrower Is a supported PG similar to a Lien? No. A PG is its own security/legal form. It can be unsupported or supported by further legal documents (charges/mortgages) that secure assets A lien is a right to receive proceeds of an asset sale but generally does not have the power of sale over the asset. Lots of words have have become interchangeable over the years e.g. lien/charge, charge/mortgage and mortgage/loan and their use can become misleading in terms of what power it gives the lender.
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