Updated: 6th November 2020
If you’ve given a personal guarantee as a director in support of a loan or credit application and your business is now facing financial difficulties you may well be worried about the potential consequences. Real Business Rescue experts can answer any questions you might have on the subject and detail the potential options available. Watch the video below for an overview of the key issues relating to director personal guarantees.
A personal guarantee is a legal contract between a creditor and an individual within a company, used as a security in obtaining some form of financing for the business. Many commercial lenders – such as banks – will require an applicant to enter into a personal guarantee which certifies that they will be held personally liable for any company debts that go unpaid. Personal guarantees are typically used by lenders to minimise risk when lending to companies.
Unfortunately, if your company is entering into liquidation and you're concerned that you won't be able to pay the amount due under a personal guarantee, there are limited options available to you. In liquidation the Court will likely order you to pay the amount due, and if you cannot do so you may have to file for bankruptcy and the creditor may be able to seize property that is listed in the personal guarantee.
If you would like to discuss your personal guarantee concerns, or need help in dealing with a particular creditor regarding a personal guarantee, you should seek advice from a licensed insolvency practitioner. You can do this by contacting us and arranging a free no-obligation consultation at your convenience.
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