I'm curious though, it sounds like the outside lawyers that you're dealing with are giving you fee certainty and the terms of
sort of personal guarantees.
Clearly, the
lack of a personal guarantee or collateral is a huge upside, however, as you might imagine, this upside comes with some downsides.
Consider discussing whether to limit the
duration of personal guarantees so that they expire after a number of years of ongoing operation in good standing.
Failure to pay your loan may result in the repossession of your business assets or your personal assets — in the
case of a personal guarantee.
Regardless of your desires, essentially any bank is going to require some
form of personal guarantee from at least one of the LLC members in the case of a newer LLC (eg; one that doesn't have a track record, existing cash / cash flow, etc..)
North Shore Ventures Ltd v Anstead Holdings Inc and Ors [2010] EWHC 1485 (Ch); [2011] EWCA Civ 230; and [2012] EWCA Civ 11: Acting for high net worth Russian individuals in the High Court and Court of Appeal defending a multi-party action valued at $ 55 million in respect of the alleged breaches of a loan agreement, allegations of fraud,
enforcement of personal guarantees, freezing injunctions and the disclosure of trust documents.
Both directors signed a statement on the last occasion when the facility agreements were amended to confirm that Investec could continue to rely on the personal guarantees and stating that they waived their right to seek independent legal advice in
respect of the personal guarantees.
A guarantor may seek the
reduction of the personal guarantee after a certain period of time, after a percent of the loan has been repaid, or as a key financial metric improves.
A franchisor's willingness to negotiate the application and
scope of a personal guarantee may differ depending on whether the franchisee is a single - or multi-unit franchisee.
AND even if you had the foresight to get a partner and form a LLC, you might also have put your assets at risk if you had to sign any
type of personal guarantee for a loan in order to secure financing for your business.
The husband failed to make the payments that he was obliged to make and in March 2006 a bankruptcy petition was presented against him by a creditor of a company called Combi (UK) Limited alleging non-payment by the
husband of personal guarantees.
Appeal case highlights
perils of personal guarantees It is now common practice for directors to enter into personal guarantees when securing funding...
Among other things, the decision in this case did not address the
effect of the personal guarantee that the franchisee's individual principals signed, and whether this was done under a condition in the original franchise agreement, or whether this was a new condition that the franchisor may have imposed at the time of the resale.
Failure to pay your loan may result in the repossession of your business assets or your personal assets — in the
case of a personal guarantee.
Traditionally, you might approach a bank for a loan for but nowadays small business financing is a tough game wherein several lenders refuse to loan money without any collateral or any other
form of personal guarantee.
Advising a major trade finance bank on the foreclosure of a trade finance loan, including seeking injunctive relief in Switzerland, and the
enforcement of a personal guarantee.
Understandably, especially in the case
of a personal guarantee, generally sought from a director in a business where the shareholders are READ MORE
Not surprisingly, the Supreme Court was somewhat irked by the selling shareholder's failure in the buy - sell offer to make the closing of the buy - sell transaction conditional upon a release
of his personal guarantee.