There will be 6 guarantors in total all of whom are being indemnified by the club.
...There will be 6 guarantors in total all of whom are being indemnified by the club.
I understand the premis of jointly and severly liable but my query is can and would the lender target me in particular due to the liquidity of my assets?
If you sign a joint and several guarantee, you should consider yourself liable for the full amount (plus interest). You should also consider at what stage your guarantee will be released. Does it only cover this specific loan or does it cover future loans or extensions to this loan.
Gulliver (retired banker)
What does this mean?
If you sign this guarantee and for whatever reason the club does not repay the loan the bank will come after all of you but they will target the one who is easiest to get the money from. If others are mortgaged to the hilt than the easiest mark may be you.
You should not sign any personal guarantee until you have been given the advice of a solicitor. Unless this is for a relatively small sum of money and you can afford the risk of the total amount. And if you've been asked by others to sign the guarantee you all 6 should be open and honest to each other as to what you are signing up for. Don't be put under peer pressure.
If you do sign the guarantee make sure it is not open ended, that the amount is clearly stated and fixed, it's duration, and how you can get out of it.
Firstly, I don't think having liquid assests will make you more of a target for a bank if all goes wrong. After all, you do not know what assets your co-guarantors have and the bank may not or should not know what assets you have (make sure your savings are not in the lending bank).
Secondly, what is the value of the club indemnity? If it needs to be invoked then surely it would be unable to honour it?
Thirdly, I would suggest avoiding personal guarantee for a club as others have posted here - +1.
Avoid PGs like the plague if you can help it. It's one thing having a PG for your own business if you're trying to keep it afloat. But for a sports club?! Not in a million years would I sign one.
Also, the clubs indemnity is worthless. If the club can't pay back the loan, and the bank enforces the PGs, then being indemnified by the club (which is unable to pay back its loans anyway) is a fallacy.
The credit union have told us that in a worst case scenario, they will pursue the personal gurantees before pursuing the lands of the club to repay the loan. As I understand it, being indemnified by the club means that in this situation we as guarantors can call on the assets of the club.
I think it is probably about PR for the credit union ie they don;t want to be the ones to force the wind up of the club.
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