Selling my 100% in a CC

[daveob]

You do know, while you're doing this whole cc members change, that any surities that you signed for the debts / accounts / bank accounts of the cc, will still be in force after you change the members ?

So, if the new owner decides to default for any reason, they WILL come knocking on your door for full settlement and it doesn't make any difference to them that you sold the cc - fact is you signed the surity and you are liable.

[Dave A]

any idea if my CGT calc is right

I'm hoping Sean or Christine will check that one over. It looks like you'd gone about calculating it the right way, but my knowledge on CGT is rusty.

[eitai2001]

You do know, while you're doing this whole cc members change, that any surities that you signed for the debts / accounts / bank accounts of the cc, will still be in force after you change the members ?

So, if the new owner decides to default for any reason, they WILL come knocking on your door for full settlement and it doesn't make any difference to them that you sold the cc - fact is you signed the surity and you are liable.

The sale of members interest contract stipulates that they indemnify me against all sureties I have signed for any defaults as of the effective date with the exception of the overdraft which is retrospective, and that THEY must make the best effort to release me from all my sureties, and if not the sureties will move to them.

In any case, the only dangerous Surety I have is the overdraft which they will sign over once I give them access to the bank account.

The suppliers, they have to sign all new dealer applications for each one in any case.

[daveob]

contract stipulates that they indemnify me against all sureties I have signed for

I'm not a legal person, but I don't think that would hold up, unless the holder of the surity co-signs the agreement accepting the transfer of the surity.

If I was your supplier, and the new owners defaulted, I would come to you for payment. I don't imagine that any other agreement that you, as the signature on the surity, has with a third party, would have any influence on the surity you signed for me ( unless I had previously accepted the transfer ). How would the supplier be able to verify the credit worthiness of the new owner without being made aware of the fact ?

As a supplier, I would hold you liable for full payment, and you in turn ( after paying me ) would have to re-claim the amount from the new owner.

Any of the legal experts on the forum have any input here ?

[eitai2001]

I'm not a legal person, but I don't think that would hold up, unless the holder of the surity co-signs the agreement accepting the transfer of the surity.

If I was your supplier, and the new owners defaulted, I would come to you for payment. I don't imagine that any other agreement that you, as the signature on the surity, has with a third party, would have any influence on the surity you signed for me ( unless I had previously accepted the transfer ). How would the supplier be able to verify the credit worthiness of the new owner without being made aware of the fact ?

As a supplier, I would hold you liable for full payment, and you in turn ( after paying me ) would have to re-claim the amount from the new owner.

Any of the legal experts on the forum have any input here ?

I think you are correct in 1 sense, but I will be able to have a successful counter claim against them, and can tie up their assets. At the same time, the suppliers are not allowed to sell to them without getting my permission first if they haven't submitted a new dealer application, and as such ... I can combat the supplier with negligence ... because otherwise any fool off the street could walk into the supplier and purchase something.

If the supplier sees they bought the interest, and the supplier knew about it ... then my surety clause will be void, as the entire supplier contract would be void due to the fact that they know it has incorrect information and I am not a member.
If they did not know, then the contract would still be in force, but then I would hit them based on their own security controls and negligence.

In terms of the bank ... that will be signed over on Saturday when we go to the bank.

But what do you legal experts have to say, I'm far from knowing I am right ... this is just my thoughts on the matter?

[eitai2001]

I will also on my own perogitive send out an email to all suppliers with the special resolution stating I have sold the members interest in the company to another person and am no longer involved with the company.

I'd like to see them take me to court when they are all fully aware I am no longer the owner. I will send them all a copy of the sales agreement, and tell them to be aware of clause x.x which states the information regarding the indemnity or suretyship, and also the number on which they can use to contact them.

[daveob]

I will be able to have a successful counter claim against them, and can tie up their assets.

Problem is that if this situation arises, you will probably be sitting with enough assets and cash / value for the supplier to attack / attach, whereas the new owner probably doesn't - indicated by the fact that he defaulted in the first place.

So you might find your supplier gets paid ( by you ) and your counter claim, even if successful ( and legal costs aside ) may result in you getting 100% of what the new owner has at the time - nothing.

Again, just my opinion, but I would seek some serious legal advice first.

[daveob]

I'd like to see them take me to court when they are all fully aware I am no longer the owner.

and that's EXACTLY what they will do. They ( and the law ) don't care if you are or aren't the current owner. Nor do they care at all if you ever were the owner. All they care about is the surity document in black and white. You "Mr J. Soap" signed surity for ABC cc registration number xxxx for it's debts to the supplier. That surity remain in force, irrelevant of whatever else you e-mail or send them, until they release you from that surity in writing.

Same as if you signed surity for your buddy in the pub to buy a car. You're not related to him. You don't even know where he lives. But if he defaults, you'll be paying the bill.

[daveob]

after thought .. by now, I think we'll have to agree that there is a potentially very dangerous pitfall here. Without the proper legal guidance, we could bounce possibilities forwards and backwards for weeks.

Bottom line is that you have had a potential problem pointed out - now you need to get professional advice about this and make sure that all bases are covered before you proceed.

Sorry if it sounds like I'm giving you a hard time about this, but honestly, I really don't want to see anyone paying for someone elses mistakes, or getting well and truly Hidley'd.

[Dave A]

I don't imagine that any other agreement that you, as the signature on the surety, has with a third party, would have any influence on the surety you signed for me ( unless I had previously accepted the transfer ). How would the supplier be able to verify the credit worthiness of the new owner without being made aware of the fact ?

Well there's the key right there.

What you need really is a release from suretyship from each of the suppliers at which you are a surety for the cc. I'd suggest getting the same from the bank too. And then keep them somewhere really safe.

Obviously the goal is to ensure as smooth a transition as possible, which gives a perfectly valid reason for you to be active in the process; going to each of the creditors, introducing the new owner, making sure any necessary amendments are made to the contracts of the cc, and getting your signed release!