The company’s debts go to the assignee; the debts you signed for personally come home with you. Guarantee strategy belongs in ABC planning from the first meeting, not the first lawsuit.
What the Law Says
The assignment resolves entity liabilities only — personal guarantees on bank debt, leases, and trade accounts remain fully enforceable against the signers, with creditors free to sue immediately upon default. Estate distributions credit the guaranteed balances; everything else is the guarantor’s negotiation.
How to Navigate It, Step by Step
- Inventory every guarantee before the ABC: loan files, leases, credit applications with buried personal language.
- Prioritize by exposure and creditor aggressiveness — the bank and the landlord usually lead.
- Open negotiations early: guarantors settling pre-suit with estate distributions pending price better than defendants.
- Protect the exempt: understand homestead and retirement protections before negotiating from fear.
- Coordinate with the ABC timeline — a going-concern sale that pays secured debt shrinks the guarantee exposure with it.
Common Questions
The buyer of the assets is assuming the bank loan. Does that free my guarantee?
Only if the bank releases you in writing — assumption without release leaves you guaranteeing the buyer’s performance; make the release a closing condition.
Can I file personal bankruptcy for the guarantees if negotiations fail?
Individual bankruptcy remains available for personal liabilities and discharges what the ABC never could — a sequencing question for your own counsel, separate from the company’s process.
Get the free California ABC Kit at justiceprompt.com — proof of claim templates, creditor monitoring checklists, wind-down planning worksheets, and AI prompts to customize every document to your situation. Free, no email wall. Also available with all ABC resources at assignmentforbenefitofcreditors.org. Educational use only — not legal advice.
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