A Corporate Guarantee is a legal agreement used when an entity is facing bankruptcy between a borrower, lender, and guarantor, where a corporation (usually an insurance company) takes on the responsibility of ensuring a borrower repays their debt. This guarantee will list how much will be given for a loan and who will be responsible for paying back the amount should the debtor stop making repayments.
There are two types of corporate guarantees: limited and unlimited. In a limited Corporate Guarantee, the guarantor is liable only up to a certain amount of the debt owed by the borrower. For an unlimited Corporate Guarantee, the guarantor is responsible for the full debt amount owed by the borrower.
There can also be a Cross Guarantee, where two or more companies provide a guarantee to one another's obligations. This often occurs between companies operating under the same group or a parent company and its subsidiaries (for example Disney acting on behalf of Marvel). You can download a Corporate Guarantee template through the link below.
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