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Personal Guarantee(s) after sell of Business

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brucevoiles

Guest
What is the name of your state? Tennessee

Nine years ago I signed a Personal Guarantee with a material supplier to open a credit account for my business that was a corporation. Six years ago I sold the corporation and notified the supplier of the sell and instructed them to close the credit account and release my guarantee.

The material supplier is now trying to sue me personally to collect a debt from that corporation. It claims it does not have my notification of the sell. I have not been able to find my documentation yet. What are the limits of a personal guarantee?
 


Dandy Don

Senior Member
So why haven't you given them the names of the company officials who now operate the corporation and told the creditor to forward the bill to them, and does the state government agency who regulates business names in your state have a record of the change in ownership?
 
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brucevoiles

Guest
The new corporation stockholders/owners recently closed the doors and took the assets to start a new business leaving the corporation's creditors hanging and did not file bankruptcy.

Since the corporation's new officers will honor the company's debts the material supplier is coming after me with the personal guarantee I signed.

I can not find any law on limitations of a personal guarantee such as a time limit, requirement of creditor to notify the guarantor of outstanding debt or whether the sell of the business would relieve me of the personal guarantee.
 

divgradcurl

Senior Member
What does the change in corporate ownership have to do with anything here? When you personally guaranteed the loan, you basically became reponsible for the loan until it was paid off.

Six years ago I sold the corporation and notified the supplier of the sell and instructed them to close the credit account and release my guarantee.
Unless the creditor agreed to remove your name from the loan, simply selling the corporation and notifying the creditors isn't going to release your obligation. You probably should have worked something out with the buyers to get the loan paid off in full -- then your obligation would have been released.

But unless you have something from the creditor releasing you from the loan, you're on the hook. If you end up paying on the loan, you may have some sort of cause of action against the buyers of the corporation for indemnity, but that won't change your obligation to the creditor.

It may be worth your time to take ALL of your documentation down to a local attorney to see if perhaps there is some other way of getting you released from the obligation.
 

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