Guarantee and Indemnity Claims

Company directors are often required to give guarantees and indemnities to creditors in relation to the liabilities and debts of the company. 

If a creditor makes a demand on the director for payment of the company’s debts, this can cause them significant financial hardship. The director’s personal assets, including the family home - even if it is jointly owned - may be at risk.

JMW can advise on such demands and assist in resolving any disputes as to the validity of claims. We can also negotiate time to pay and secure reduced settlements.

To speak to a solicitor about guarantee and indemnity claims, contact us by calling 0345 872 6666, or fill in our online enquiry form to request a call back.

How JMW Can Help

The team at JMW regularly advise directors on their rights and options in relation to guarantees and indemnities. We regularly defend directors in relation to proceedings brought by creditors in relation to disputed claims.


What happens if a company becomes insolvent before debts are paid?

The insolvency of the company does not release the guarantor’s obligations under the guarantee. However, if the company enters into a company voluntary arrangement (CVA), the terms of the arrangement may release the guarantor from liabilities under the guarantee. 

Directors who have given guarantees should seek legal advice as soon as a company faces financial difficulty.

Payments made by the company before it goes into administration or liquidation, including paying off a creditor to whom the guarantor has given a guarantee, may subsequently be found to be a preference that can be set aside.

Can I file for bankruptcy if I am unable to pay the company debt?

Should a company become insolvent, and the director is unable to pay the debt, the creditor may be able to commence bankruptcy proceedings against the director. Bankruptcy should be avoided whenever possible.

What happens if a company is jointly owned?

When two or more company directors sign a joint and several guarantee to the same creditor - for instance, a bank - the creditor may be able to claim the whole amount from just one of the directors, as opposed to all of the directors.

Before giving a guarantee, directors should seek independent legal advice in order to understand the extent of their liability and the potential far-reaching consequences for them. For instance, a director should:

  • Seek to negotiate a ‘cap’ on the guarantee in terms of amount and time
  • Seek to ensure the guarantee is in relation to a specific loan, as opposed to all future borrowings
  • Avoid securing the loan by way of a charge over the family home

A director must also take into consideration their duties and any conflict of interest that may arise by signing a guarantee.

Talk to Us

If you need to speak to a solicitor in relation to guarantee and indemnity claims, contact JMW today by calling 0345 872 6666. Alternatively, fill in our online enquiry form and we will get back to you.

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