Legal Question in Business Law in California

Loan guarantee

I signed as a guarantee for a business line of credit for a company that I was suppose to become a partner with. I did not become a partner and the company is now going under and claiming Bankrupcy. I'm I still responsible to pay for the loan even if The company is going to list this loan under their bankrupcy?


Asked on 6/14/07, 1:25 pm

3 Answers from Attorneys
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

Re: Loan guarantee

You are responsible. Maybe there is a fraud or bankruptcy preference issue involved and you can turn around and sue one of the principals of the "company." (I am putting "company" in quotes because legally a business organization is either a proprietorship, partnership, or a corporation -- this matters a lot for purposes of your question.)

You need to talk to a lawyer experienced in bankruptcy law, right away, especially if the amount involved is significant.

Read more
Answered on 6/14/07, 1:42 pm
Terry A. Nelson Nelson & Lawless

Re: Loan guarantee

Sorry, but DUH, of course your guarantee is enforceable if made. You have a problem. Hope you aren't forced into bankruptcy yourself. You probably will have to defend against a lawsuit on the guarantee. If so, feel free to contact me for legal help.

Read more
Answered on 6/14/07, 2:20 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Loan guarantee

You probably are liable to the lender for any losses it sustains. That's what guarantees are all about. It is, however, well worth you time and expense to retain a local business lawyer to go over the whole deal to see if there is either a basis to avoid the guarantee or to recoup your losses from the bankrupt business or its other principals.

Read more
Answered on 6/14/07, 6:19 pm


Related Questions & Answers

More Business Law questions and answers in California