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ARTICLE · 25 JULY 2024

In Practice: Advising A Guarantor

Travers Smith LLP
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Guarantors face significant risks in "all monies" guarantees, potentially covering future debts. Key considerations include scope limitations, revocability, timing of obligations, and the inclusion of onerous clauses. Careful drafting and awareness of legal protections are essential for managing liabilities and ensuring clarity in guarantee agreements.

United KingdomFinance and Banking
James Bell
James Bell
Charlie Bischoff
Charlie Bischoff
Donald Lowe
Donald Lowe
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This article was first published in the July 2024 issue of Butterworths Journal of International Banking and Financial Law.

In this article Knowledge Counsel James Bell looks at issues to consider when protecting the guarantor's position in finance transactions (or indeed other commercial transactions) and how that might be negotiated.

Corporate guarantees will typically be drafted using a beneficiary-friendly template as a starting point. In syndicated loan finance transactions, the Loan Market Association's guarantee clause is the form preferred by lenders. The same form of clause is used in bilateral loans. Alternatively a standalone guarantee document may serve to record credit support extended by a parent company, director or other person not party to the core finance documents. The Pension Protection Fund (PPF) has its own standard form guarantee, under which a company may give a guarantee in favour of the scheme trustees to cover shortfalls in a

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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