A Personal Guaranty is a contractual commitment by an individual (often a founder, executive, or sponsor) to be personally liable for specified obligations of a company or borrower if the company fails to perform, effectively providing creditors an additional source of recovery. In lending and certain acquisition structures, Personal Guaranties can be limited (e.g., to “bad acts” carve-outs) or full-recourse, and they materially change risk allocation for the guarantor.
