Securities: debts: general points: payments under guarantee
Lenders commonly require guarantees over money they are lending. For example, a bank may agree to make a loan to a company, B Ltd, provided that the debt is guaranteed by C Ltd. If B Ltd is unable to repay the debt, the bank may ask C Ltd to pay instead. If C Ltd pays the bank under the guarantee it will, under general law, take over the bank’s rights to B Ltd’s debt.