Losses: loans to traders: payments under guarantee: example
A Ltd, B Ltd, C Ltd and D Ltd have jointly and severally guaranteed a bank loan to E Ltd of £100,000.
E Ltd goes into liquidation and it is accepted that the loan has become irrecoverable from E Ltd.
On 1 October 1993 A Ltd pays £100,000 to the bank under the terms of the guarantee.
As at 1/10/93: B Ltd is in a position to meet fully
its liability under the guarantee
C Ltd’s position is such that only
£10,000 is recoverable from it
D Ltd is insolvent and about to go into
liquidation with no prospect of meeting
any liability under the guarantee.
The relief due to A would be:
|Less||agreed payable by C Ltd||10000|
|Amount to be divided between co-guarantors able to meet their contributions in full||90000|
|Less||payable by B Ltd||45000|
|Relief due to A Ltd as at 1/10/93||45000|