Personal Guarantees

Everyone hates guarantees.  Nevertheless, fallout from the financial crisis is  they will be more common rather  than less.  So, the question can not be simply how  to avoid  them (definitely the preferred course).  Instead, investors need to consider how to assure they are not exercised.

This process begins during your project due diligence.  The key factor is assuring that regardless of what occurs now or in the future the value of the asset will easily exceed the amount and level of the  guarantee.

The risk of a guarantee is manageable so long as the asset value under a forced sale will exceed the  guarantee amount.  This is the critical measurement investors must make.

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