Personal guarantees and voluntary administration

One of the questions we are often asked by our clients is: "can we enforce a personal guarantee given by a director of a company in circumstances where the company is placed into voluntary administration?". In short, the answer is "no".

Directors are generally required to give personal guarantees for company's debts and obligations in loan, lease or other finance arrangements. In such circumstances, the director will be personally liable for the company's debt or commitment if the company does not meet that obligation because the guarantee is a separate agreement between the director and the creditor. Most commonly, director guarantees are contained in the terms and conditions of the facility sought by the company; however, there may be some occasions where the director guarantee is detailed in a separate document.