Expert: Jason Milleisen - 6/12/2011

Question
QUESTION: My question is can a company hold a personal guarantee that was signed back in
1999 to another company. The company that held the personal guarantee was bought
Out by another company when that took place there was no outstanding debt owed then
that company was bought out by another. The company that bought out the final company is now
Trying to use the personal guarantee that was signed to the first company back in 1999. Can
They do that.

ANSWER: Hi Kelly,

In order to determine whether the personal guarantee is valid, I'd first suggest reviewing a copy of the personal guarantee from 1999.  That may give you some insight into what the personal guarantee committed you to, for how long, and for how much.

In your question, you state that a new company is trying to use a personal guarantee that was signed to the first company back in 1999. Generally, personal guarantees are signed as part of financing with a bank (so the obligation is to the bank, not the company), so it's usually not as important what has happened with the business.  If the loan that you signed the personal guarantee in connection with still has a balance, or is a line of credit that is still open, your personal guarantee would likely still be in place.


Regards,
Jason Mileisen
Founder, Distressed Loan Advisors
www.JasonTees.com
1-877-436-4533

---------- FOLLOW-UP ----------

QUESTION: The personal guarantee was originally signed to a supplier in order for a
Company (sub contractor ) to gain a line of credit with them. There is no
Amount or date as to expiration. When the 1 st company (suplier ) was bought out
by company 2 there was a (0) balance owed to company 1. Then company
2 was bought out by company (supplier) 3 and again therewas a ( 0) balance
I was just wondering if personal
guarantees can transfer to company 3. There name is no where on the paper
only the original company (supplier). Also when being served can they send the
papers through the mail (ONLY) and that be a valid way to get served or must someone
sign for them. THE people are looking into retaining a lawyer but they want 5 thousand
retainer first. Thanks for your response hope this other info explains better.

Answer
Kelly,

Since the guarantee is a personal guarantee (as opposed to a corporate guarantee), I believe that that as long as the loan remains in place, any personal guarantors will also remain liable even if at some point the loan balance was $0.

With regards to what constitutes proper service, that is a question that an attorney in your state would be best equipped to answer, as the rules of service vary from state to state.

Regards,
Jason