In the case of a corporation , can an officer sign the personal guarantee
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Posted 2 years ago #
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Ben,
I believe anyone can sign as a personal guarantor of the debts of a corporation. They would be signing and guaranteeing as an individual backed with their own personal assets for the debts of another person or entity.
If empowered, an officer of a corporation could sign on behalf of his corporation to guarantee the debts of another person or entity, including another corporation. That guarantee would be backed by the assets of the corporation and not the officer's personal assets.
Posted 2 years ago # -
On our personal guaranties, we require that an owner, partner or corporate officer sign it. In the case of a corporate officer, the instructions on our form explicitly say not to include their title, e.g. "...as CFO of XYZ Corp". If they sign as an officer, instead of as themselves, that is generally held to void the "personal" part of the guaranty.
We only accept a signature on a guaranty of someone with a stake in the company, since an office manager, purchasing agent or other employee could leave after signing, and be completely untraceable. This makes enforcement of the guaranty difficult, at least.
Posted 2 years ago # -
I wanted to give some input on this one. Scott's comment that sometimes after somebody leaves a company they can become untraceable. This is true. This is why We ALWAYS make sure that we obtain the SS# from the person (s) signing the personal guaranty. And because of this we have not yet had an issue of being able to find somebody.
Posted 2 years ago # -
I have one additional comment. If the signer is not an officer or director, it may be possible for the the guarantor to claim that as an employee, not an owner or officer or director, there was no "Consideration" for their signature.
Michael Dennis
Posted 2 years ago # -
Michael, that is GOOD to know!
Thank you for adding that!
Posted 2 years ago # -
Christine, here is another complication that I would suggest you discuss with your attorney. If the guarantor is married and resides in a community property state as it relates to the assets of a married couple, it may complicate and possibly even prevent enforcing an personal guarantee --- even if the guarantor is an officer or director assuming that only one of the spouses signed the personal guarantee.
Again, I recommend you discuss this issue as well as options to address it with an attorney.
Best regards
Michael Dennis
Posted 1 year ago # -
Michael's point about "consideration" being absent is exactly why we don't accept any guaranties from anyone except someone who is an owner or senior manager/director, and in fact we want someone signing the regular application who is fairly high up the food chain in that organization. Bottom line is you want the people who are ultimately responsible for living up to the credit agreement to be the ones who are *held* responsible for payment.
Posted 1 year ago # -
Well put Scott
Posted 1 year ago #
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