What liability attaches to a personally guaranteed loan for an LLC?
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What liability attaches to a personally guaranteed loan for an LLC?
I am a partner in an LLC with 2 other people we will call Business A. I made a personal guarantee for a loan using another business, business B as collateral for that loan. The other 2 partners are also on the loan personally guaranteeing it. I am thinking about selling my ownership of business A and wanted to know if I would still be liable for the loan even if I am no longer part of the business?
Asked on February 12, 2012 under Business Law, Colorado
Answers:
Joseph Gasparrini
Answered 12 years ago | Contributor
Your question indicates that you signed a guaranty in connection with a loan to the business that you own with two others. Under these circumstances typically you would continue to be liable for the repayment of the loan, even after you have sold your interest in the business that is the original borrower on the loan. Of course, a guaranty is an agreement that can contain a wide variety of provisions; and sometimes a person who signs a guaranty will request and perhaps obtain a statement in the guaranty that he will be released from the obligations of the guaranty under certain circumstances. However, unless you negotiated a some type of release provision with the lender when the loan documents were being drafted, it is highly likely that you will continue to be liable under the terms of the guaranty.
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