Personal Guarantees: How can we help you?

What are Personal Guarantees?

Guarantees are given by one party in respect of another party's liabilities. In other words, they are a promise to pay another's debt. Company directors are commonly required to provide a personal guarantee where they acquire a loan or other financial package to support their company. Wives and husbands of company directors might also be required to guarantee the loans of a company.

So, how can we help?

Enforcement of a personal guarantee can be a challenging and stressful time. Where there is personal liability under a guarantee, this can result in personal assets, such as the family home, being the subject of court proceedings.

We specialise in disputes surrounding personal guarantees. We will consider whether your personal guarantee is, in fact, valid and enforceable. There are many options that we consider in assessing whether your personal guarantee is actually enforceable, including the following:

• A guarantee relies on there being a valid primary obligation. This means that if the underlying loan document is invalid for any reason, then the guarantee may also be unenforceable.
• If the loan document has been varied in any way between the lender and the company without your consent as guarantor, then this may release you from liability under the guarantee.
• Where the personal guarantee has been procured by misrepresentation, or undue influence has been exerted, then the personal guarantee may be set aside. Wives and husbands entering into guarantees in respect of liabilities of their spouses, without the benefit of independent legal advice, may be the subject of undue influence.

Even if the personal guarantee is valid, there are a number of rights which may arise under certain circumstances which we may be able to utilise to limit your liability or to help recover any loss. For example, you may be entitled to any security which the lender holds for the company's debt. Additionally, if there is more than one guarantee for the same debt, then you may be entitled to seek a contribution from any co-guarantor.

If you are being pursued under a guarantee, we can help you to challenge the validity of the personal guarantee or to limit your exposure under it.

Contact us on 0345 274 6876 to discuss how we can help to resolve your dispute. Also see: Personal Guarantees and Promissory Estoppel - A 'Sleeping Pill'?

---

Jade Flint Managing Associate 0345 050 3698 jade.flint@freeths.co.uk

Gregg Parkin Associate 0345 274 6876 gregg.parkin@freeths.co.uk