What happens to a personal guarantee in liquidation?
Company liquidation does not normally cancel a director’s personal guarantee. If the guaranteed obligation is triggered, the creditor may pursue the guarantor under its terms. The amount, security and available defences depend on the document, so obtain advice before agreeing a settlement or admitting the claim.
Business Insolvency Helpline • Checked 1 November 2026
General guidance, with procedural detail focused on England and Wales. Rules and routes can differ in Scotland and Northern Ireland.
What should I check in the guarantee?
- The identity of the borrower, guarantor and creditor.
- Whether liability is capped or covers wider borrowing.
- Whether interest, charges and legal costs are included.
- Any security over personal property.
- The demand requirements and any written release.
Do not assume the guarantee relates only to the first loan advance. Obtain the signed documents and subsequent variations, not just a lender’s summary.
Could my home be affected?
Personal assets can be exposed where a guarantee is enforceable. A secured guarantee may include a charge over a property. An unsecured guarantee can still lead to personal recovery proceedings, so unsecured does not mean harmless.
If there are several guarantors, check whether liability is joint and several. The lender may not have to divide the claim equally between directors.
What are the practical next steps?
Keep the demand and note its deadline. Compare the claimed balance with statements, payments and any recovery from company assets. Get independent legal advice on enforceability and personal debt advice where affordability is a concern.
A proposed repayment or settlement should be realistic and documented. Do not move assets or repay yourself from the company to prepare for a personal guarantee claim.
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Related questions
Usually not by itself. Check whether the creditor has expressly released you in writing and whether the document creates continuing obligations.
A creditor may consider a proposal, but acceptance is not guaranteed. Review liability and affordability before making an offer.
Personal insolvency can affect unsecured liabilities, but security and exceptions require separate assessment. Obtain advice before selecting a personal debt route.
Sources checked for this guide
- Personal guarantees (www.gov.uk)
- Director information hub understanding the difference between personal and company debts (www.gov.uk)
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