The call for a change in the law has come from the All-Party Parliamentary Group (APPG) on fair business banking. The Group has gone to the Supreme Court to seek a change in the law on so-called “reflective loss”, which applies to losses suffered by individuals that overlap with the general loss of the company. The law currently states that only the company itself can bring a claim.
Purbeck Insurance Services, a UK’s provider of personal guarantee insurance is supporting calls to empower the shareholders and owners of small businesses to take legal action against firms that are to blame for their business falling into insolvency.
Todd Davison, Director at Purbeck Insurance Services said: “Thousands of small business directors and owners put their personal assets on the line to secure funding for their business – whether to get it off the ground, keep it afloat or to expand. In a recent survey of SME business owners close to half (47%) are simply looking to keep their business on an even keel this year while 38% are planning for growth.
“A business failing can have long term consequences for that business owner or director yet the current law offers little recourse for these hard-working, entrepreneurial people who shoulder the immense financial responsibility that comes with running over 99% of the UK’s private sector businesses. While Personal Guarantee Insurance can help mitigate some of the financial risks for directors who have taken a Personal Guarantee backed loan, we fully support the APPG’s calls for a change in the law to empower all small business owners with greater legal rights if their business fails.”
Personal Guarantee Insurance offers protection against the risk that the Guarantee is called by a lender and will offset any outstanding obligations called in under a Personal Guarantee. The level of cover is based on a fixed percentage of the Personal Guarantee the company director wishes to insure and this is dependent on whether the corresponding finance facility is secured or unsecured.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.