Limited Recourse Guarantee Clause (Credit Agreement)

This Limited Recourse Guarantee is a clause in a loan agreement whereby the lender agrees to limit the guarantor's liability to the specific assets pledged by the guarantor. This clause contains practical guidance and drafting notes. The lender agrees that neither it nor any other secured party will have any interest in the guarantor's other assets, personally or otherwise, to satisfy the debt. It also states that if a court orders a judgment against the Guarantor, the Guarantor will only be enforced against the borrowers and the loan parties, which could be the borrower(s) and other guarantor(s). A limited guarantee clause is more desirable to a borrower and guarantor, whereas a full guarantee is preferred by lenders. For more information on guarantees, see the practice notes: Guarantor Rights and Liability under a Guarantee, Guarantees for Asset-Based Loans, Joint, Several and Joint and Several Liability in Loan Documents, Guarantee Claims Enforcement, and Independent Legal Advice ...