Sepideh Nassabi Posts "Making Demand On A Guarantee?"

If you are a lender or someone who has guaranteed a loan, you should pay attention to a recent decision released by the Court of Appeal.

In The Toronto-Dominion Bank v. Konga, the appellant guaranteed a loan made by The Toronto-Dominion Bank ("TD") to Vertamin Inc. TD alleged that Vertamin Inc. breached the terms of the loan agreement and demanded payment of the loan from both Vertamin Inc. and from the appellant as guarantor.

TD was successful on its summary judgment motion against the guarantor for payment based on the guarantee. The motion judge found that Vertamin Inc. was in breach of the loan agreement by:  (i) being overdrawn on its line of credit; (ii) being in breach of the tangible net worth requirement; and (iii) not providing its accounts receivable listings.