Joint guarantee means to guarantee jointly with the actual obligor (principal obligor) to fulfill its obligation payment. It is different from the general guarantee and you can request the performance of the guarantee even if the principal obligor does not default. Many representatives are joint guarantors when a private company borrows. The system of joint guarantee in company management is in a difficult situation, especially for managers of small and medium enterprises, it is a very strict system. In the event of a situation such as company sale, we will bear the responsibility in solidarity with the company. The big cause of the company sale of small business is due to the inability to repay the debt. Although it is also listed on M & A in connection with the company sale, the management of SME has an obligation to become a joint guarantor for borrowing as a company, and there is a joint guarantee system. When small and medium enterprises receive loans from financial institutions etc., in most cases management will not be able to receive loans unless you guarantee individual and solidarity yourself.
There are cases in which the obligation is dissolved by voluntary arrangement
When the company’s performance is positive and repayment of borrowings can be repaid from revenue, you can concentrate on the business without problems but if the performance deteriorates and you can not repay it from earnings, you have to increase the borrowing to continue the business lose. A joint guarantee of management is occurring because the financial institution absolutely does not believe the repayment ability of small business. In some cases repayment on the scale of up to hundreds of millions of yen is imposed. In such a case, negotiation does not seem to be well organized even if management negotiates. So if the liability becomes so much that you can not repay it · If you think that there is not much profit from the future in the company, there is a way to cancel the debt by voluntarily sorting out. Especially when a manager has assets in some way they may be required to repay them by selling it. So if you organize voluntarily before that you can protect the company itself at its worst. However, financial institutions do not thoroughly collect money for corporate managers, there are cases where they do not collect any further if judging that repayment is impossible.