We have recently acted for a partnership that has a portfolio of residential properties. Our clients have been in a difficult and deteriorating relationship with their bank for the last two years in relation to a number of facilities they operate in connection with their property portfolio (totalling £1.5 million of borrowings). Attempts by them and their financial advisers to obtain a sensible resolution with the bank had not succeeded. We were asked to assist in finding a solution.

Failure in procedures

It was clear that it was necessary to find a way of putting pressure on the bank, which had clearly had a failure in its procedures. Those failures had caused excessive interest and penalties to be charged to our clients. The bank was insistent that significant termination penalties would be imposed if our clients wished to terminate the facilities and re-bank elsewhere.

Our case

We were successful in forcing the bank to change its position by presenting our clients’ pleaded case. The bank had suddenly realised the difficulty of its own position and were prepared to negotiate with our clients. At a without prejudice meeting, the principal elements of a settlement were agreed and a binding settlement agreement was entered into shortly afterwards.

Resolution

The settlement terms resulted in a refund to our clients of approximately £100,000 of overpaid interest and penalties taken by the bank, and more favourable terms for the remaining duration of the existing facilities with a future saving of interest. Our clients had had a good relationship with the bank personnel for many years prior to these problems arising and were happy to continue in that relationship once the problems had been resolved. They were able to avoid the problems of moving their facilities to a new bank with whom they had no prior relationship.

If your business has also had issues with your bank contact our commercial litigation team on 0345 872 6666 or fill in our contact form.