We recently had a partner who was pulled into legal proceedings relating to a business he sold in 2007 where the lease was assigned (and in this case another 3 times). The new tenants had defaulted on the lease and caused significant damage to the property.
In this instance, there was a failure at the time of the original sale of the business to release the personal guarantees of the partner (or to at least have the lease limited to a finite period). This meant that while the lease continued, the original tenant remained on the hook for the failings of the future tenants. This was a massive financial exposure that was not flagged at the time of the original sale.
Working closely with one of our professional partners, we were able to seek an early settlement to release all parties from the proceedings. At the same time we undertook a restructure of the partner’s assets as they had exposure to other long-term personal guarantees.
Given personal guarantees are often given as an afterthought, C&D can assist you in protecting your personal assets from the negative impact of personal guarantees.