Legal Question in Business Law in North Dakota

Personal Guarantee Lost

I owned a business which borrowed on a line of credit. The business was sold but not for enough to settle all the debt. I have one creditor who is trying to collect but I cannot find any documents that I signed a personal guarantee. I asked them for it and they stated that during the sale from one company to the other that paperwork was lost. Do they have the burden of proof to show I am personally liable? They have my SSN but all payments and checks were settled thru a business acct and not me personally. If they cannot provide me that proof can I force them to go after the corporation only?


Asked on 8/20/07, 10:14 pm

1 Answer from Attorneys
Steven Vatndal Law Office of Steven J. Vatndal

Re: Personal Guarantee Lost

Until the other company provides evidence that this is a personal obligation of yours, you should treat it as only a corporate debt.

There are several ways that they can try to get personal libility. A personal guarantee is the most obvious, but they also can ask a court to "pierce the corporate veil" or challenge the way the business was sold.

If a significant amount of money is involved, you should get an attorney's assitance both to more thoroughly evaluate your exposure to personal liability and to start gathering documents and statements that would be useful in defending you (or spreading personal liability among other officers or shareholders as well) if the creditor pursues its claim.

Please e-mail me directly with any further questions.

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Answered on 8/21/07, 9:36 am


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