60,000 pounds question of friendship

PETER CLARKE has lost more than pounds 60,000 in a failed business venture. The money was compensation he received for horrific injuries suffered in a road accident while on duty as a policeman.

He is now 33, and the accident five years ago has left him disabled and unable to work.

The collapse of the business has left him penniless, all his compensation payment has gone, and he is in danger of losing his home. He and his young family are living on his police pension and DSS benefits.

In November 1990, Mr Clarke received thousands of pounds compensation for his injuries. At the time, his wife Mandy was working as a manager for a wedding services company, Congratulations (UK).

Mrs Clarke said: 'Pamela Borg, the person who ran the wedding company, was a friend of ours for over five years. She offered us the chance to invest in the business and to open a new branch.'

Mr and Mrs Clarke purchased shares in the company for pounds 50,000, and lent a further pounds 3,000 to set up the new shop in Hertfordshire.

The shop opened on 27 December 1990, and Mrs Clarke was happily installed. Her contentment was short-lived. In May 1991, Lloyds Bank asked for security on the company overdraft of pounds 23,000. Mrs Clarke said: 'I was asked by Mrs Borg to secure the overdraft on our house to the tune of pounds 30,000. My husband and I were not happy about it . . . but as we had invested a lot of time and money, we agreed.'

Meanwhile, Mrs Clarke, Mrs Borg and a third person, who was also involved in the business, went to the company's solicitor to draw up an agreement. They were each liable for pounds 10,000 in the event of the guarantee being payable.

Just weeks later, Mrs Borg told Mrs Clarke she was in financial trouble and intended to declare herself bankrupt. Mr and Mrs Clarke were panic-stricken. According to the terms of the guarantee, if one of the directors was declared bankrupt then the overdraft would become payable.

They immediately went to see the bank manager. The situation was deteriorating rapidly. The shops stopped trading and a directors' meeting was scheduled for 15 July.

On 13 July, Mr and Mrs Borg left for Malta, Mr Borg's homeland. Mr and Mrs Clarke believe that they have not returned.

Mr and Mrs Clarke were left to wind up the company, which cost them a further pounds 3,000. The couple have laid out more than pounds 62,000 in total.

In addition, under the terms of the personal guarantee, they are liable for the entire pounds 30,000 overdraft, which is secured on their home. They have had no joy pursuing Mrs Borg, who subsequently did not declare herself bankrupt, nor the third person, for their share of the borrowings.

A spokesman for Lloyds Bank said it was actively pursuing the other parties concerned, but if the money was not recoverable from them, then 'technically we are entitled to take our security from Mr and Mrs Clarke'.

The spokesman added: 'We are treating the case with every sympathy. Mr and Mrs Clarke can rest assured that we do not intend to take any precipitative action against them.'

We were unable to contact Mrs Borg or the third person.

(Photograph omitted)