How to get out of a commercial equipment lease with personal guarantee if you are no longer a part of the company?
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How to get out of a commercial equipment lease with personal guarantee if you are no longer a part of the company?
I opened an Scorp with other 2 partners to do a restaurant. We applied for a lease for some restaurant equipment and they had chose my credit so I had to sign a personal guarantee being the president for the company as well. Now I sold my share of the business. The other partners own 100%. However, the leasing company doesn’t want to transfer the lease. Is there a way to get them to transfer it?
Asked on September 26, 2010 under Business Law, Colorado
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Unfortunately, there is no way to make them transfer the lease--you signed a guarantee, and they are entitled to hold you to that guarantee regardless of your position in or ownership of (or lack thereof) the business. There are things you could have done prior to selling the business, which may be more difficult now if the transaction is consummated: e.g. you could have, if the lease had an clause by which it could be paid off early (like many car leases) have had the company pay off the lease as a part of the transaction or as a condition to you selling your share of the business; or you could have had either the company or the person who bought your shares either assume the obligation (if it could be assumed, which it likely could not have been) or at least have indeminfied you for any potential loss and/or posted a bond or reserved cash to indemnify you. You can still try to do these things, but if the deal is closed you have much less leverage.
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