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Guaranty
Last Updated: Jun 7, 2019
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Three-party contingent liability agreement under which a third-party or parties (the "Guarantor" or "Guarantors") agree to be directly or collaterally responsible for the obligation (ABL loan) of a first-party (the Borrower) to a second-party (Lender) in case the first-party defaults or fails to fulfill its part of a deal. Guaranties are typically provided by non-borrowers (Parents, Subsidiaries, Individual Owners) in ABL Facilities. A Guaranty may be limited to a certain dollar amount or in the form of a full guaranty covering all obligations of a Borrower to the Lender. When a Guaranty is entered into by more than one party, a joint and several guaranty ensures that any one guarantor can be held fully responsible for all obligations.