Why guarantees matter
A limited company is a separate person. Its directors and shareholders are not, as a rule, liable for its debts. A personal guarantee changes that: the person who signed it agrees to pay what the company owes if the company does not. Many New Zealand credit applications contain a guarantee clause, signed by a director at the bottom of the form, often years before anyone thinks about it again.
When a company is liquidated, removed from the register, or simply stops paying, the guarantee is frequently the most valuable document on the file.
What we check
- Who signed. A guarantee binds the person who signed it personally.
- What it covers. Whether the guarantee is continuing, whether it is capped, and whether it extends to interest and recovery costs.
- Who else. More than one guarantor, or security such as a general security agreement registered on the PPSR.
Liquidation does not usually release a guarantor
A company's liquidation does not usually release a guarantor. You can claim in the liquidation and pursue the guarantor.
A guarantor is usually an individual, so a statutory demand is not available against them. The route is a demand, then if needed a claim to judgment, then enforcement against what the guarantor owns or earns.
How we enforce a guarantee
- Read the credit application and terms and check whether the guarantee is sound.
- Make formal demand on the guarantor.
- Negotiate a settlement or arrangement where that is the better outcome.
- Where the guarantor will not pay, issue proceedings and enforce the judgment.
If your terms of trade do not include a guarantee, it is worth adding one before you need it. We will look at yours.
General information, not legal advice. This page describes New Zealand law and practice as at October 2026; the right step for a particular debt depends on its facts. Where a matter needs legal advice, we will say so.