CG66033 - Losses: loans to traders: payments under guarantee: example
A Ltd, B Ltd, C Ltd and D Ltd have jointly and severally guaranteed a bank loan to E Ltd of 拢100,000.
E Ltd goes into liquidation and it is accepted that the loan has become irrecoverable from E Ltd.
On 1 October 1993 A Ltd pays 拢100,000 to the bank under the terms of the guarantee.
As at 1/10/93: B Ltd is in a position to meet fully
its liability under the guarantee
C Ltd鈥檚 position is such that only
拢10,000 is recoverable from it
D Ltd is insolvent and about to go into
liquidation with no prospect of meeting
any liability under the guarantee.
The relief due to A would be:
| 听 | 拢 | 拢 | 听 |
|---|---|---|---|
| 听 | Total paid | 听 | 100000 |
| Less | agreed payable by C Ltd | 10000 | 听 |
| 听 | D Ltd | Nil | 10000 |
| 听 | Amount to be divided between co-guarantors able to meet their contributions in full | 听 | 90000 |
| Less | payable by B Ltd | 听 | 45000 |
| 听 | Relief due to A Ltd as at 1/10/93 | 听 | 45000 |