Liabilities under personal guarantees

There are several circumstances in which a potential lender might ask a company director or a third party to provide a personal guarantee (whether backed by a legal charge over property), a loan or credit facility, including those relating to property or supplies.

Anyone who provides a personal guarantee will be personally liable for the debt being guaranteed, and if a legal charge over property is also provided, that property can be at risk if the liability is called in and you are unable to make payment.

Independent legal advice should always be obtained prior to entering into a personal guarantee and legal charge. Depending on the circumstances, it may be possible to negotiate the obligations of a guarantee and establish a liability cap with the creditor in this regard as part of their contractual arrangements.  In any event, it is crucial to understand the terms and consequences of the documents and their effect prior to entering into any such arrangements.

In addition, if you are being pursued pursuant to a personal guarantee and/or legal charge, our team can assist in defending you and/or engage with the relevant creditor to see if the matter can be resolved in a more amicable manner.