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Chapter 11 filings effect on personal gauarantee's.

Saint Louis, MO |

My wife and I are both minority shareholders in a struggling company. We have been locked out by our majority partners with no hope of resolution. We both signed personal guarantees on the lease and sba loan. We want out of these gaurantees. We think business will eventually fail. Can filing chapter 11 for me or my wife now force a resolution with the holders of the gaurantees even though the business is still open.

Attorney Answers 1

Posted

Any chapter bankruptcy will give you a discharge on any personal guarantees you sign (I don't know your personal situation so I wouldn't know if a Chapter 11 is actually the best chapter for you). It may force them to work with you or not, it depends on the circumstances, but if you are certain the business will fail, it certainly is to your advantage to have your liability for their debts discharged. I would recommend consulting with a local bankruptcy attorney about this, who also has experience in dealing with failing companies.

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