Consequences of a guarantor going bankrupt

[Steve Thatcher]

Fact that a contingent debt such as a guarantee is written off in the bankruptcy

[broken link removed]

This is the Official Receivers own technical manual.

Please if you are not legally qualified and wish to make a point always point out your provenance for your advice, or stipulate if it is personal opinion.

So many people can get confused from statements made on a forum, which may seem like fact but are not

Steve Thatcher
www.stevethatcher.ie

 

[Bronte]

This is the Official Receivers own technical manual.

Aren't they brillant in the UK, they think of everything. Wonder does that apply to people going bankrupt in Ireland, or those doing PIA's etc.

Another very good reason for going UK bankrupt. Should be added the key post on UK bankruptcies. Guarantees were signed left right and center during the boom.

 

[Bronte]

Not true. You are perfectly entitled to obtain release from a guarantee after giving the required period of notice.


Yes its true that the bank are not obliged to release the guarantee unless they are satisfied to do so or satisfactory alternative security is provided.

Your last sentance contradicts the first sentance. My understanding of guarantees, any that I've seen is that they are open ended, and will not be revoked unless the bank agrees.

 

[Palerider]

Fact that a contingent debt such as a guarantee is written off in the bankruptcy

http://www.insolvencydirect.bis.gov....art7/part7.htm

This remains ambiguous despite your assertion Steve., I have taken the following from the guide to bankrupcy published on the UK's ISI website, in italics.

a. Debts

Discharge releases you from most of the debts you owed at the date of the bankruptcy order. Exceptions include any claims which cannot be made in the bankruptcy itself.

my personal view is if the guarantee is not called in at the date of the bankrupcy then the debt is not owing at that date and no claim can be made.
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In the link to the Official Receivers guide you provided it comments as follows on guarantees...again in italics and IMO says the same thing

A personal guarantee may be a contingent liability but the rule against double proof means that the creditor cannot prove his/her claim until the amount guaranteed is paid in full by which time the amount of the debt will be known.

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I cannot comment on the Irish system as I'm not qualified to as I'm not a PIP however based on my research this morning I think that this is not at all clear and would probably require the legal people to trash it out if ever this got to be an actual occurance.

 

[Steve Thatcher]

Fact that a contingent debt such as a guarantee is written off in the bankruptcy

http://www.insolvencydirect.bis.gov....art7/part7.htm

This remains ambiguous despite your assertion Steve., I have taken the following from the guide to bankrupcy published on the UK's ISI website, in italics.

a. Debts

Discharge releases you from most of the debts you owed at the date of the bankruptcy order. Exceptions include any claims which cannot be made in the bankruptcy itself.

my personal view is if the guarantee is not called in at the date of the bankrupcy then the debt is not owing at that date and no claim can be made.
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In the link to the Official Receivers guide you provided it comments as follows on guarantees...again in italics and IMO says the same thing

A personal guarantee may be a contingent liability but the rule against double proof means that the creditor cannot prove his/her claim until the amount guaranteed is paid in full by which time the amount of the debt will be known.

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I cannot comment on the Irish system as I'm not qualified to as I'm not a PIP however based on my research this morning I think that this is not at all clear and would probably require the legal people to trash it out if ever this got to be an actual occurance.

Pale Rider you are not legally qualified either in Ireland or the UK. I am a 20 year qualified solicitor in the UK who has specialised in bankruptcy the whole of his life.
The Personal Guarantee cannot be pursued after bankruptcy....end of story.
The rule against double proof, is claiming under the guarantee and then the bankruptcy itself. It is not ambiguous and you will confuse people and introduce an element of doubt when there is none.

Steve Thatcher

 

[Bronte]

The rule against double proof, is claiming under the guarantee and then the bankruptcy itself.

So that phrase in the guidebook about double proof, it's a double proof if one had to do both as in

a) the guarantee and
b) the bankruptcy?

And therefore it's not allowed. I found that sentence confusing I must say.


The relevant bit from your link:

40.125 Guarantees
A guarantee can give rise to contingent claims against the insolvent.

A personal guarantee may be a contingent liability but the rule against double proof means that the creditor cannot prove his/her claim until the amount guaranteed is paid in full by which time the amount of the debt will be known.

 

[Alphashark]

Many thanks for all the opinions and advice. Two related queries;

1. Does the jurisdiction where the guaranteed debt or related property is? It is in mainland europe.

2. Must the lender be advised?

Kind regards.

A.