Legal Question in Bankruptcy in Illinois

Summoned by bank-Persoanl Guarentee

In June 2005 I entered a business with a partner and through a local bank and SBA, obtained a loan which required my personal guarentee. I did so, and shortly after all was complete, the partnership fell apart and the comapnies I jointly owned was dissolved and completly out of the deal. Last month we got served with Summons for my ex partner not paying Principle in Oct, interest on the Note, and Default Interest. How liable am I for any of the funds due? This Summons was from a bank looking to collect-what can they collect after the partnership was dissolved but the personal guarentee remains-it seems we overlooked that portion when getting out of the whole mess and was never addressed.


Asked on 12/14/08, 9:51 pm

2 Answers from Attorneys
Lesley Hoenig Lesley A. Hoenig, Attorney at Law

Re: Summoned by bank-Persoanl Guarentee

That is the whole reason lenders get personal guarantees, so that if the entity ceases to exist and can't pay the debt, they have someone to go after. You are 100% liable, and you may want to consult a bankruptcy and/or collections attorney about what your best options are.

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Answered on 12/15/08, 1:05 am
Motty Stone Law Offices of Motty Stone

Re: Summoned by bank-Persoanl Guarentee

Probably the lender allowed the partnership to dissolve because it knew it had your personal guarantee. Depending on how you guaranteed the loan, you may not be obligated to pay all the late fees, but you are certainly liable to pay the principal and interest.

It is worth mentioning that depending on how you set up the partnership, you may have been personally liable anyway. General partners often retain personal liability for the partnership's debts. Next time you try to start a company, you might consider forming an LLC or an S-corporation.

Feel free to call if you have any questions.

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Answered on 12/15/08, 3:39 am


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