Can I go after a seller's guarantor if the seller itself has no money left to pay a judgment?
Yes, generally, if the purchase agreement or a related document included a personal guarantee — commonly from the principal behind a corporate seller — you can typically pursue that guarantor directly once the seller itself can't pay, since a guarantee is specifically designed to give you a second, separate person or entity to collect from when the primary obligor comes up short.
What's actually covered depends closely on how the specific guarantee is worded, though. Some guarantees are limited to particular obligations — a vendor take-back note, for instance — rather than every possible claim you might have against the seller, so a guarantee given for one purpose doesn't automatically extend to cover an unrelated indemnity claim. Before assuming everything you're owed is covered, have the guarantee's actual scope reviewed against what you're now trying to collect, since a mismatch between the two is a common and avoidable surprise at this stage.
Key takeaways
- A personal guarantee generally lets you pursue the guarantor once the seller can't pay.
- Guarantees exist precisely to give a buyer a second source of recovery.
- Coverage depends on the guarantee's specific wording, not every possible claim automatically.
- Review the guarantee's actual scope against what you're trying to collect before relying on it.