Business owners sat next to laptops discussing finance

PCS Sandbach Ltd

Meet the team:

Business owners sat next to laptops discussing finance

Mr Weekes was the director of a civil engineering company, PCS Sandbach Ltd (the “Company”) and had been a long-time customer of National Westminster Bank Plc (“Natwest”).

In August 2009 the Company was awarded a large government contract which was worth over £6,000,000. They required additional financing of some £300,000 in order to complete this contract and the Company spoke to their relationship manager, Mr Ian Hutch (“Mr Hutch”), at Natwest in August 2009. The Company was advised that this additional finance would not be an issue and Mr Hutch suggested that the company should consider an Enterprise Finance Guarantee (“EFG”) Loan. At this point they had an existing overdraft facility with Natwest which was in the region of £400,000.

The Company thought that they had agreed the required financing of £300,000 to run concurrently with their existing overdraft facility. However it took Natwest nearly 5 months to provide the Company with an offer in an email dated 23 December 2009 and that was when Mr Weekes realised the terms being offered were not what he thought had been agreed.

Natwest were offering the Company a EFG Loan in the sum of £200,000. Natwest were also offering a reduced overdraft facility in the sum of £250,000. These facilities were not sufficient to meet the Company needs. However given the length of time that it had taken Natwest to make this offer and the pressures the Company were under they to fulfil their contractual obligations in respect of the government contract they had no option but to agree to these terms.

The facility agreements were signed on 3 February 2010 at Mr Weekes home. Ms Sharon Wooliscroft, the Company’s new relationship manager, arrived with the documentation at 15:45pm and advised that she was late to pick up her child and so these needed to be signed straightaway. This left Mr Weekes and his wife very little time to review the documentation carefully before signing.

Once the EFG loan funds arrived in the Company’s bank account this was used by Natwest to reduce the overall facility to £250,000 in total and thereby mitigate the bank’s exposure rather than fund the Company’s development as intended.

The Company had already begun work on the contracts in December 2009 and due to the lack of funding problems began to arise. As a result of these difficulties the Company lost this contract in September 2010.

In February 2011 the Company was advised that they were being transferred from their current bank manager and placed into Natwest’s Global Restructuring Group (“GRG”).

Since they were placed into GRG the Company has estimated that they have paid approximately £820,000 in fees and increased interest rate charges. Mr Weekes was also required to give a personal guarantee in the sum of £270,000.

The Company appointed a liquidator on 31 January 2011 and eventually the Company was dissolved on 12 July 2013.

As a result of the Company appointing a liquidator GRG made a formal demand for the amounts due under the personal guarantees given by Mr Weekes in a letter dated 8 April 2011.

It is clear from the content of the correspondence between Mr Weekes and GRG that Mr Weekes is of the view that he was not fully informed about the nature of the EFG loan and the consequences that would follow any breach of this facility. Mr Weekes has sought legal advice from Berg in respect of his issues with Natwest and the EFG loan. He has also made formal complaints to the Financial Ombudsman Service and the Financial Conduct Authority in respect of this matter.


Meet the team: