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Wednesday, April 06, 2016

Corporate Guarantor's Burden



The document in question is XYZ's standard Corporate Guarantee. XYZ is unlikely to allow any amendments thereto. Accordingly, the Corporate Guarantor needs to be aware of the following before entering into the Corporate Guarantee Agreement:
  1. The Corporate Guarantor is liable to XYZ as the principal debtor i.e. in the event of default, XYZ has an option to claim immediately all outstanding amount from the Corporate Guarantor without the requirement to claim first from the Debtor.

  2. The Corporate Guarantor is still liable to XYZ notwithstanding any variation to the banking facility taken by the Debtor from XYZ.

  3. It is imperative that the Corporate Guarantor closely monitor and supervise the management of the Debtor with regard to this banking facility so that the Debtor do not vary the banking facility (including enlarging or varying the facility amount) with XYZ without the knowledge and prior consent of the Corporate Guarantor.

  4. The Corporate Guarantor for all intent and purpose is as though it is taking the banking facility themselves from XYZ and is fully liable for it.

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