The Impact Of Amalgamation And Other Fundamental Changes On Guarantor Liability

What happens to the liabilities of an amalgamating company upon amalgamation? The general rule is clear that these liabilities continue as obligations of the newly amalgamated company. As the Supreme Court of Canada held long ago in Black and Decker, "the amalgamating companies continue without subtraction in the amalgamated company, with all their strengths and their weaknesses, their perfections and imperfections, and their sins, if sinners they be."¹ This rule has been reflected in the business corporations statutes in most jurisdictions.

But what about third parties to an amalgamation, such as guarantors? Will a guarantor continue to be liable for the debts and obligations of a debtor company after it has amalgamated? In many cases, a guarantee will contain a clause expressly providing that the guarantee extends to the liabilities of any entity into which the borrower may amalgamate. But what happens if that express clause is missing from the guarantee for