Lloyds Bank

SME solution?


  1. A personal friend of mine, Chairman of iconic British brand name company, granted Lloyds Bank (LB) a Personal Guarantee (PG) on part of that company’s debt to LB. Allegedly, the assets of the company were many times the debt to LB. The Chairman was advised by the Bank this was a “token gesture”. Lawyers looked at the Guarantee and advised the Chairman it was the “standard form”.
  2. Within four months LB received an offer for and then sold the debt to a “vulture fund” (VF) specialising in buying brand names. This was against the Chairman`s wishes. Allegedly, LB refused to listen to other offers to buy the debt.
  3. The VF, now owning the debt, demanded and purchased the shares in the Company owned by the Chairman and his family.
  4. The VF then carried out a rapid pre-pack, selling the company back to the VF, at an allegedly very low value.
  5. The VF claimed to the Chairman his PG was now crystallized, and they, not LB owned it. They coerced him into waiving a service contract with a 10% holding of the company.
  6. As with many other iconic brand companies purchased by this VF, the company has now gone through another insolvency process.
  7. It seems this VF is better at using or abusing our insolvency rules and PGs than running iconic British brand companies, at a substantial cost to the UK`s brand name heritage. Supposedly just this brand was worth more than £100m.
  8. Misusing the purpose of PGs was part of this process.
  9. Perhaps, the ultimate misuse of PG’s was when NAMA sold several billions of loans to Cerberus for roughly 25% of face value.
  10. Cerberus then sold these loans to the Guarantors for roughly 50% of the Guarantee value.
  11. Cerberus made 100% gross profit on the transaction.
  12. Signing a PG again is tantamount to signing a blank cheque. (https://thelawdictionary.org/personal-guarantee/)
  13. When you sign a Guarantee you are not told it can be sold to a third party.
  14. The secured lender has little or no responsibility to the Guarantor to collect the debts from the borrower before calling on the Guarantee.
  15. Neither does any insolvency practitioner appointed by the secured lender have any worthwhile responsibility to the Guarantor to collect from the borrower before the Guarantee is called on.
  16. It is not surprising that signing a Guarantee is the same as signing a blank cheque.
  17. In my case, I took top legal advice and I signed a £500k Guarantee of “last resort” of the debt of Heritage plc.
  18. The receivers appear to have collected £5m against a debt of £3m from Heritage plc to LB. My Guarantee was called on, but I have no idea where the missing recoveries are.
  19. The Receivers have little “duty of care” to the Guarantor.
  20. Further, in my case, LB appear to have entered a perjured Affidavit to claim a false £1.5m shortfall against the £3m debt to justify the call on my Guarantee.
  21. The FSA investigated the Heritage recovery figure in 2008, but refuse to provide me with the result of that investigation.
  22. My attempts to see that investigation through the Freedom of Information Act are now in the Court of Appeal and the Upper Tier Tribunal.
  23. A PCP against the alleged perjurer is in a Bristol Court.
  24. A PG is again a blank cheque. PGs need to be regulated.
  25. Why did Hector Sants, when he was head of the FCA, resolve the PPI situation by bringing an action through the Courts? http://www.telegraph.co.uk/finance/personalfinance/insurance/8462864/PPI-banks-lose-battle-against-FSA.html
  26. Why is Andrew Bailey attempting to put the PG situation under the FCA’s dust-laden carpet?
  27. I suggest the UK urgently needs a Tribunal Service to look at the abuse of PGs.

Jeff Lampert

This blogpost is for information purposes and should not be relied upon as legal advice because it does not consider or take into account your own personal circumstances. If in doubt, seek legal advice.

Déjà vu

At the SME Alliance Meeting in the House of Commons following the debate on RBS
treatment of SMEs
on Thursday, 18 January

Jeff Lampert, the founder of diyLAW, declared "deja vu".

The similarities between two debates on the same subject, nineteen years apart, demonstrate that regulation of banks has gone backwards. Lloyds Bank and RBS were mentioned in both debates, but in the one in May 1999 RBS was praised, not criticised.

The FSA was not mentioned in May 1999, the FCA was rightly heavily criticised yesterday.
Jeff Lampert currently has ground-breaking "once removed" litigation against the FCA.
Asked to comment Jeff said " if the Government had acted properly after the first debate, the content of the debate yesterday would not have been so heart-breaking"...

This blogpost is for information purposes and should not be relied upon as legal advice because it does not consider or take into account your own personal circumstances. If in doubt, seek legal advice.

Litigation in London v Litigation in Lisbon

When Heritage Plc was closed in 2  hours by Lloyds Bank in 1996 two litigations followed. One in London against Lloyds Bank and Grant Thornton (GT), one in Lisbon, against members of the establishment. Some topline comparison between the two jurisdictions is interesting.

The Lisbon one has just been settled and I am receiving €400 pm into an account I have recently opened in Cascais, Portugal. Not a princely sum, but the original investment was only £50k. The London litigation is ongoing and is for a significant amount.

I started Heritage in 1980. By 1982 it was looking to expand into ceramic housewares. I “stumbled”  across a manufacturer of throw-away ceramic pate dishes, Cerexport; between us we developed Heritage pottery a range of oven-to-tableware. The pottery was very profitable for both of us: we both floated on our different stock market 5 years later.

I was offered pre-flotation Cerexport shares. A director of Lloyds Merchant Bank who was advising me on Heritage’s forthcoming flotation asked if he could also benefit from this. We both bought £50k. These purchases were facilitated by a company owned by Cerexport’s marketing director, who was also a director of Heritage.

Cerexport’s flotation coincided with Black Monday and a fall in share price.  The Lloyds director suggested he got our cheques stopped, which I did not allow. Both the Lloyds director and I received a certificate from a Lisbon stock broker confirming they were holding our (bearer) shares. The very day that Lloyds Bank appointed GT as conflicted Admin Receivers to Heritage the marketing director of Cerexport was in London discussing the logistics of a £500k order for a Woolworths promotion. The appointment came as a surprise to everyone. Going forward it was suggested that if necessary we could start a new company, starting with that Woolworths-order.

When asked what I was going to use as finance, I suggested we started with the shares in Cerexport. To which I was asked, “what shares?”. Coming, at that time, from someone I had considered a friend was a nasty shock. The Lloyds director and I took our share certificates to the Portuguese Stock Exchange, who investigated. They (CMVH) confirmed we had been the victims of a crime, by this time eleven years ago.

The first difference I then became aware of was that Portugal had a limitation of 10 years on criminal actions, unlike the UK, where there is no limitation on crime. CMVH suggested we bring a civil case, which was not subject to limitation, as it would be in the UK, and CMVH would support such an action. The action was against 3 defendants, the Marketing Director of Cerexport, the stockbroker who provided the certificates and the owner of the brokerage who also at that time ”owned” Cerexport. A bank that had subsequently bought the brokerage was involved as an “interested party”. CMVH also said that the defence was roughly translated that each defendant was claiming that another defendant had committed the crime. Our first firm of solicitors, who were happy to accept the case on contingency, was, in fact, a Brazilian firm, who had no right of audience before a Lisbon court. Where we had believed this firm was instructing barristers, they were, in fact, instructing an entirely independent firm of advocates, who were not part of the contingency arrangement.

The second thing we learnt is that Lisbon has advocates, not solicitors and barristers. Our next firm was a small firm that was relocating from London to Lisbon. I went to Lisbon, met with our new solicitor and the solicitors from the other side, and thought I had agreed a settlement. Subsequently, I was advised that it had not been agreed by all parties. My new solicitor, whilst pointing out that I had a brilliant case, now wanted a monthly retainer to continue.

The third thing I learnt was to maintain my cynicism. The Lloyds director did not continue with the litigation. The next firm of advocates was what I thought a branch of a British firm. When the Lisbon office started to chase me for fees that had not been agreed, I found out that the London and Lisbon offices were no longer connected. I clearly had a case proven to a criminal level, but could not find a professional in Lisbon to bring it. With my two words of Portuguese, I could not do that myself. Through the Chamber of Commerce I met ME and F. Particularly I liked Miguel Costa from that firm. We agreed a fee. Sometime later I was called over for a Hearing in Court.

I was aware that in Lisbon everyone pays their own costs, win or lose. Which was fortunate as one of the defendants was being represented by the former Attorney General of Portugal. There appeared to be a number of untruths in the evidence submitted by the other side. Miguel explained that Portuguese Courts have more tolerance of perjury than UK ones. The Hearing was conducted by a professional Judge. Yet another difference from the UK was that Judges become trainee judges without first being barristers.

Lisbon has a different concept relating to disclosure. Disclosing the CMVH report, I disclosed my entire case. I was cross-examined by the Judge, then the advocates for the defence. Then I was sat down with my interpreter next to the main defendant, and the Judge cross-examined us in tandem. To some of his answers, the Judge commented a Portuguese word which Miguel translated for me as “incredible”! The Judge found for me and also fined the main defendant €800 for litigating in bad faith.

The Judgment was appealed on the grounds that I MAY have collected the shares from the stockbroker. Miguel then did a brilliant job proving a negative.



Dedicated to my friend Miguel Costa who very sadly died in the recent forest fires in Portugal.




Update from the late Miguel Costa`s firm in Portugal:

Dear Jeffrey,

Thank you so much for this great article! We are very grateful for your action.

Miguel would be very flattered for your kind words.


Martínez-Echevarría & Ferreira – Sociedade de Advogados

This blogpost is for information purposes and should not be relied upon as legal advice because it does not consider or take into account your own personal circumstances. If in doubt, seek legal advice.