to ING Lease
ING Lease has avoided not being repaid debts totalling hundreds of
thousands of pounds following a major court victory last month.
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The High Court dismissed a claim from a former client of ING
Lease, Philip Harwood, chief executive of Homebuy Group PLC, a TV
rental company, that he was personally liable for only some debts
owed to the leasing company.
During Homebuy’s lifetime, it had been financed by ING Lease,
generally under block discounting agreements, whereby blocks of
contractual rights were sold by the group to the finance
provider.
Harwood, who started the business in 1995 as Peoples Choice
Rentals Limited (PCR), which later became Value Rentals Group
before renaming to Homebuy, personally guaranteed the group’s
liabilities to secure funding.
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By GlobalDataBetween 2001 and 2002, ING Lease encouraged Homebuy to acquire
Coin TV, a television rental company it also financed, which was
experiencing dire problems. This business was incorporated into the
Homebuy portfolio.
The expansion of Homebuy looked secure when it was admitted to
the Alternative Investment Market (AIM) in 2004. However, despite
two years of rapid acquisition-driven growth, resulting in sales
revenue of £93m in 2005/06, the company entered administration in
2006 following the group’s failure to obtain the additional funding
required for continued trading.
In the recent court action, ING Lease claimed Harwood had agreed
to having personal liability for the financing provided to acquire
Coin TV, the debts of which were also included in the “all monies”
guarantee in place since at least 1999.
In the early stages of discussion about the acquisition, between
May and July 2001, Harwood had made it clear he was unwilling to
personally guarantee the Coin TV business and this policy had been
agreed by the employees of ING Lease dealing with Coin TV.
However, the evidence of subsequent discussions during the
two-year period from August 2001 to September 2003, concerning a
personal guarantee, was unclear whether the Coin TV debt was not
excluded.
During cross-examination, Harwood said “there was no way I would
personally guarantee this”.
However, Michael Harvey QC, the presiding judge, held that the
earlier discussions were merely negotiations and did not form part
of the September 2003 contract terms.
On this basis, he concluded Harwood was liable for £337,984.68,
plus costs, for the remaining debt of Coin TV to ING Lease.
However, the court found the defendant’s personal guarantee was
limited only to liabilities arising from the mutual relations
between Homebuy and ING Lease. Rental arrears and early
contract-termination charges of £23,774 for office cooling
equipment, incurred by a company within the group to Shire Leasing
and subsequently assigned to ING Lease, did not form part of the
personal liability guarantee Harwood had agreed to.
