Exploding Guaranty

A term sometimes used to describe a type of guaranty similar to the Springing Guaranty but where the liability does not “spring” into life upon the occurrence of the condition (e.g. bankruptcy) but is present and alive from the outset but is extinguished if the condition occurs (e.g. recordation of a deed in lieu of foreclosure or completion of a foreclosure) or does not occur (e.g. no bankruptcy is filed, no preference action is brought) in the future.

See also Co-Obligor, Co-Debtor, Guarantor, Guaranty, Nonrecourse, Recourse, Special (or Single) Purpose Bankruptcy Remote Entity, Springing Guaranty, Springing Recourse, Substantive Consolidation.

Email Term