If you give a PG, take care or insure it.
Posted on 17th Sep 2015 13:39:50 in Personal Guarantee Insurance
Ir is important when giving a Personal Guarantee that you ensure you know what you are agreeing to and the extent of your liability.
- Your PG must be given in writing and signed by the guarantor or an authorised agent.
- The lender must be a party to it, but does not need to sign it.
- Generally it doesn't kick in until the company debtor is liable.
- Liability will generally be to the limit that the company is liable.
- Liability arises when the company defaults and the Guarantor has been served with a demand.
How to challange it
- Were there material alterations to the PG after signature?
- A prejudicial amendment to the Guarantor would render it unenforceable.
- See if the Guarantee can be revoked.
- Were you induced to enter into the PG by misrepresentation of the lender.
- Were you unduly influenced to enter into the PG
What can you do when you receive the demand
- Seek an indemnity against other directors, share the burden.
- Can you get the subrogated rights to collect assets of the business to mitigate losses.
- Can it be defended, perhaps using a defence the company might have.
- Take professional advice
Better still take the paidn and worry away by insuring your PG