Legal Question in Business Law in New York

Re: Personal guarantee on friend's line of credit

More information is needed. Are you associated with the business at all? Is there anything in writing between you and your friend - or the business?

Since you represented yourself to the bank to be the president of the company, there is no way to eliminate the obligation to the bank other than by payment.

I believe that you have numerous causes of action against your friend (fraud in the inducmenent, indemnification, breach of contract, contructive trust on the company). So your option would be to commence an action against your friend and the company.

Mike.

Re: Personal guarantee on friend's line of credit

Unfortunately, since the bank refuses to refinance the loan under your friend's name alone, your only options are:

1. Wait and see what your ex-friend does with the loan. If he pays it back to the bank in its entirety, then life is good; when the loan has a close-to-zero balance, talk to the bank again and get your name off the loan.

2. If he doesn't pay it back to the bank, pay off the LOC yourself, close the LOC account (or at least your part of it) and sue your ex-friend for the amount you paid the bank on his behalf.

3. You can, of course, always file for bankruptcy protection if this gets to be too much for you. A bankruptcy would hit YOUR credit history, not your ex-friend's.

Shakespeare was absolutely correct when he wrote, "Neither a borrower nor a lender be, for loan oft loses both itself and friend..." (Hamlet).

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.